It's a common practice among independent professionals to enter into verbal contracts with clients - handshake agreements, or deals made over the phone. Without the red tape and lumbering bureaucracy that can slow down larger businesses, independent professionals enjoy the advantages of being flexible and agile in transactions and deals.
However, while verbal contracts can often simplify business, if things go sour, they can end up making things much more complicated instead. So what's the best way for independent professionals to protect themselves from a bad situation? Here are some tips to keep your business both agile and safe.
1. Whenever possible, get it in writing. Of course, the very best way to protect yourself from issues surrounding verbal contracts is to forgo them completely, and use written contracts instead. This may not be realistic in every situation, but as much as possible, it pays to get that all-important client signature. Your contract does not have to be complex - a simple statement of the terms of your agreement, signed by both you and your client, will suffice. While most verbal contracts are legal and binding, if it ever comes to a court battle, they can be difficult to prove. Having a written contract in place removes that risk.
2. Take notes. If it's impossible to get a client signature, then you'll still want to get as many details about your verbal contract in writing as possible. Take in-depth notes on your discussion and agreement either during or immediately after your meeting or call. Save any and all files related to your contract, and document all action you take as a result of the contract. By keeping all of this information, it will be easier to prove that a verbal contract existed in court, should it come to that.
3. Find a witness. When legal cases involving verbal contracts occur, another method often used to prove that a verbal contract did indeed exist is to provide a witness to the conversation. If more than one reliable person is willing to swear that a contract was agreed to, the case becomes more than just a he said-she said situation.
4. Confirm with an email. Another effective way of proving that a verbal contract is in force is to follow up with your client immediately after your conversation via email. Restate the terms of your agreement in detail, referring to your phone call or meeting as their source. Let your client know that you are simply confirming the details with him or her, and that you would appreciate it if he or she would reply to ensure that you both understood the agreement correctly. An email exchange of this sort would provide ample proof of an existing verbal contract.
By taking these few simple precautionary steps every time they enter into a verbal contract, independent professionals can protect themselves from potential difficulties in the future. Of course, MBO Partners does not provide legal advice, so these tips are for general informational purposes only. Independent professionals should contact an attorney in their state for information pertaining to their specific circumstances.
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