The 3 Essentials Every Contract Should Include

We’ve talked about  how you can use your contract to protect your business on this blog before. A contract can help you out when problems pop up with clients, like when they completely disappear and stop replying to your emails, or when they are perpetually late paying you.

One of the things we stressed in that blog is  having a contract you can refer back to all the time. So if things do go south, your client understands that you didn't pull this policy out of you-know-where.

A contract is the perfect tool to help you have a clear conversation around expectations with your clients. But what exactly needs to be in a contract in order to make it legally legit? Every contract needs to have these three things to make it a bonafide legal agreement:

• An offer
• An acceptance of that offer
• Each party gives something up

Let’s break down what those three things actually are, shall we?

The offer

When someone reaches out to you through your website and expresses interest in working with you, you probably jump on the phone or meet them in person and offer your services. 

To officially offer your services to this new client, you can send them an invoice, send them a contract, or do both. You should specify what services you’re offering up to them; if you’re not clear about those services in your contract, it could be void if you choose to part ways later. 

You can also get more detailed about your offer in  the terms and conditions, but make sure the offer is in there to start!

The acceptance

Once that person has received your offer via invoice, contract or both, they can either choose to:

1. Pay the invoice
2. Sign the contract
3. Ghost you

In the first and second cases, your offer has been accepted. Wooo! Time to celebrate. Your contract is valid and you’ve got money coming your way.

In the third situation, it’s been rejected after a certain amount of time. If that happens to you, it’s unreasonable for that potential client to come back after a few months and expect the offer to still stand. Your prices and services have probably already changed since then, and a new offer will need to be made. (Your contract  may need to be updated, too.)

Each party gives something up

This is the crucial part that many attorneys and contracts accidentally leave out, thus making a contract invalid and worthless.

Each party in a potential working relationship needs to give up something they would have really enjoyed keeping in exchange for something in return. For example:

• You offer your services. You’re giving up valuable time you could have spent watching Netflix, working with other clients, or chillin’ on the couch with your cat.

• They offer their money.They’re giving up funds on something else, like a Peloton bike, hiring someone else for the job, or a wine subscription.

See? You both gave up something of value. The fancy legal term for this part of a contract is “consideration,” if you want to impress exactly 0 friends at the next party you attend.

Is it time to double-check your contract?

 Now you know everything you need to have a 100% valid contract. Hooray! But maybe you wanna beextra surethat your existing contracts are covering your booty legally. 

We actually suggest reviewing your contracts once or twice a year because your business changes as your services and products evolve. To do this, grab our  Client Contract Checklist, which will help you dot your i's and cross your t's.