Sometimes you just want to document your own agreements without consulting with a lawyer. Written agreements are binding documents that define the obligations of all parties involved in a specific project or for the sale of a good or service.
Written agreements are necessary to provide a clear record of agreed upon terms. That way, when disagreements arise regarding the time or terms of the agreement, there is an objective document that determines what was intended at the time of the agreement.
You can document a simple agreement by sending terms of the agreement via email and asking for confirmation indicating that the agreed to terms are correct as written.
Here are a few elements of written agreements:
- Define the scope of work. Indicate exactly what is to be done by whom and within what time frame. Also indicate who determines if the work has been completed satisfactorily.
- Establish time frames. Indicate how long the agreement lasts and any deadlines associated with it. Establish milestones and indicate when payments are to be made.
- Clarify payment arrangements. Be sure to speak clearly about money issues. Who pays what, when and how. What happens if payment is not made on time.
- Indicate how disputes will be resolved. Discuss in advance what happens if there is a later disagreement about any of the terms of the agreement – ie: if you will submit to arbitration or mediation before a legal claim is filed. Also, determine who would pay legal fees and which state law governs disputes.
Whatever you do, get something in writing before entering into agreements with clients, vendors, joint venture partners, affiliates, or anyone else for that matter. Your commitment to document the terms of your agreements shows you are serious about your business and could also reveal if you are in business with someone you shouldn’t be.
Getting something in writing is a crucial first step, however, it is a good rule of thumb for complex agreements (especially where a great deal of money is at stake) to always have said agreements drawn up and/or reviewed by a lawyer. If not, many things can end up missing when you document your own agreements via email. Things like, provisions that indicate what happens if something goes wrong, where litigation would happen (it’s quite expensive to get sued out of state), and provisions around what measures must be taken before litigation.
Having a standard set of template agreements you can modify may be the way to go if you don’t want to constantly use a lawyer. We can help you avoid costly legal disputes through proactive business planning, including crafting agreements and procedures to ensure you comply with state and federal law. To learn more about our personal approach to business planning, call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.