Why You Need Contracts


I used to think that contracts, or agreements were a sign of distrust and as long as I trusted the person or organization I was dealing with, they were not necessary. After all, early in my business career, I dealt exclusively with churches and ministries. Boy, I was wrong! So wrong. And I had to learn the hard way. When it comes to putting your resources on the line for a person or organization, you cannot be too careful in protecting your assets. You can lose everything if a big project falls through or if it’s not financed. No matter where you are in your career or business development, good contracts are critical to your success. Here’s a few reasons why:

Why You Need a Contract or AGreement

  1. A contract holds you and the other party accountable to a set of expectations and deliverables. No matter how many discussions you had about the project or how many people have given their opinion, the contract defines the ultimate delivery. During long negotiations, selective memory becomes a problem. A tight contract takes care that.
  2. The person you know and trust might not be around during the execution of the agreement. People leave, get fired, or even die during a project timeline, and the very trusted agent that initiated, understood and saw the vision for your project might not be around. A clear contract will help you manage expectations to whomever inherits the project.
  3. While your trusted friend might have given his word, he, most likely, is not the ultimate decision maker. A superior, board of directors, Elders,  or even a bank might cancel your project, leaving you without any recourse if you don’t have a written agreement.
  4. Your “friend” might not be a friend at all. I know you might have a tough time with the idea of less-than honorable “Christian” leaders. Sadly, there are posers out there who never had any intention to pay for your goods and/or services but know how to win over your affections and get you to trust them. Even with a written contract sometimes it’s hard to collect from these scoundrels. Without one, you might just as well forget it.

I have been blessed  in that not too many of my clients have reneged on their word or agreements. But I’ve had enough of them falter that agreements are an integral part of my business model. I would recommend having them even for projects for family and friends. I have never regretted having a signed written agreement.

How do you feel about business agreements with friends? Family?

  • Maurilio, Great points and as a business consultant couldn’t agree more. Thanks for sharing.u00a0 I find that when we are friends or have an affinity through faith or purpose both sides of the “deal” tend to leave out pertinent details and expectations that we would not if we did not have this bond or relationship. Like you share here, I encourage my clients to draw up an agreement if for no other reason to make sure they have covered all the bases and set realistic expectations.

    • u00a0@Carece:disqus Thanks for stopping by and sharing. I’m glad we’re on the same page.

  • u00a0I very rarely do business stuff with friends, it gets to messy.nEspecially when you want to have a contract and they do not get why.nMy roommate wanted me to do some work for him and I knew right away that was a very bad idea. If I am dependent on my friends to get work then I probably am in the wrong business. I can say no to them because our friendship is way more important.u00a0

  • @johngmagyar

    A close friend of mine told me years ago, “View every client as your potential next, best friend.”. It has changed the way I do business because I genuinely treat every client as if they will. That makes it tough because there is a thin line there of trust/no trust when contracts enter in but I agree with Maurillio, there’s no better way to say “I love you” than with a contract! It really keeps business simpler!

  • Clear contracts are a must in cross cultural work.  So many things get twisted and distorted so quickly.

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