4 Things to Read Over Before You Sign Your Next Contract
Raise your right hand and promise me something…
“I promise to read contracts before I sign them.”
Good, you really need to do that. And since you're going to start doing that, I'm going to tell you 4 things to look out for before signing a contract, because if you're gonna read it, you got to know what to look out for.
Does this contract say what everyone's responsibilities are?
Usually, someone is providing something like a service, and the other person is providing money, payment. Those are each responsibilities. We can get deeper into the nitty-gritty of what those responsibilities are, though.
Coaches might want to make sure that their clients are obligated to communicate with them in whatever frequency they want. A graphic designer offering a VIP day might want their client to have the responsibility of being on call during that VIP day so they can discuss things that allows the VIP day to happen. All of these things are responsibilities.
Does the contract say who owns what?
You know, I was going to talk about IP, didn't you? Worksheets, videos, graphic designs. These are all deliverables that can be exchanged in a working relationship.
If you are providing the service, you want to be crystal clear on who owns what. And that sometimes means who doesn't own what.
Does it say what happens if someone wants to cancel or terminate the agreement?
Yeah, it happens. So you really should agree on a protocol that you both have to follow if someone wants to cancel or terminate.
How's money going to be handled?
How are refunds going to be handled?
How about deliverables?
Would you have to deliver a draft?
Or should you expect a draft to be delivered to you even if the contract doesn't reach its fulfillment?
And finally…Indemnification
Indemnification is a fancy legal word for repaying, or maybe refunding, but more so repaying someone if damage occurs. In other words, if I am damaged because of something you did in our contractual relationship, indemnification says you have to pay me for the damage that I suffer because you acted the way you did, or you breached the contract or whatever it is. There's also mutual indemnification that says, basically, this works both ways. If I breach and you suffer damage, I pay you if you breach and I suffer damage, you pay me. Look for indemnification too, and if it's appropriate, insist on that mutual indemnification.