A contract is an official means of communications. If done correctly, both parties in the contact will understand the agreement, clearly. If not done correctly, someone end with disappointments. By Gary Shotton #000423
Click Here to download in audio (.mp3 format); right click on link and select “save as”
Click Here to download in video (.mp4 format); right click on link and select “save as”
By Gary Shotton
Hello my name is Gary Shotton, and I’m here as a part of inspiring better business, IBB talks. Today I’m want to talk about the subject of contracts, you know, as a business person, you’re going to start experiencing the need and to understand contracts and how they work. Now, I’m down the line of ways in many years and the contracts I’m dealing with are fairly detailed and several pages and honestly probably need an attorney to interpret it and make sure that it’s fair to you. But I want to talk back when you’re getting started in business and the idea of contracts there, and how you get started and why you should start thinking and preparing in a modest way, your business around some contracts and know when you’re asked to sign a contract what you’re doing. And so the idea of a contract is a really a means of communications. It’s not intended to take advantage of one person over another, or give favor to one person, but are one side of the deal, but it’s a communications tool.
Now if one side has experience and draft the contract and, the other side does not have experience and doesn’t understand how contracts work. They really could be an extreme advantage to those that know what’s going on. So, I don’t want you to feel like you’re learning about contracts in order to take advantage of somebody, but mostly to defend yourself and to be fair, it’s a communications tool, you want to communicate exactly what’s being agreed to. Now when I started my first business, it was very small. We had a car pulling off trailer and we’re moving furniture and what we would back up to the driveway of a house where furniture movers and I would meet the customer and explain, maybe our hourly rate or reconfirm just a very little bit of bit information verbally, and we would start moving furniture, and we would get at the end of the job and most of the time where there was absolutely no problem with that main means of communications, they understood I understood, and it was simple, no complication no signatures, no reason to sign anything, it was done.
But as life went on and as I grew as a business I started realizing, I’m taking some extra risk here, I need to be sure that this customer knows clearly what we’re agreeing to. So, by trial and error and a few mistakes I’ll tell you how my contract block worked. I had a contract. It was a page that described what our prices were in a small block of the front page of this contract was in English, probably there some of maybe 10 sentences, it wasn’t much, and in that on the overall page it really showed who. The agreement was with clearly the name of the customer and who I was, because that’s, I drafted the contract and it had that as part of the letterhead. But over time, the I was willing and needed to start changing those wordings over in the block of information. There are several things that happen on occasion, we would get ready to move and we complete the move, and then the customer didn’t have the money to pay the bill. Well, hold it just a second.
You had us, and they wanted to pay us later. Well, I don’t have the money today, so maybe I could pay you next week. That’s not what we agreed to. Well, I hadn’t agreed to it I just communicated that as a possibility and hadn’t written it down. And so basically I add that to my contract that says that payment is prior is due. At the completion of the job. Well I had some other things in there that I discovered that at times, a customer might become disgruntled with us or a little bit, and for one reason or another something minor, and they would want to delay or refuse to pay. While I also added the terms that says I have the right to be paid prior to completion of the job. What that meant is, I could sense and we had it’s happened several times, that the customer started talking to our man or our people and say hey, when we’re done I mean I’m no way I’m paying for all this, they need to talk to me, because I went out on a few occasions, and I talked to my people and say listen, I need you to stop these are my guys stop moving and I talked with a customer says say, I need to go ahead and collect payment prior to getting the job done.
Well I had that right because they sign the document. And then that right I exercise that so I at least had the money in my pocket at least the estimated amount, and it made some people mad, but I had to be collect my money so I changed the wording. Another thing popped up. Occasionally, I wasn’t sure that when it said that was the customer, whether they actually own the goods. One thing happened was two young ladies in Africa deadly they had a just an internal dispute. It was none of my business, and they were living together and it ends up that one of the two just hired us to move the other person out of the house. While I didn’t know whether or not that person that I moving the furniture was the person that I that that was contracting that call the customer. So, in my contract I acknowledge that that this was the that clearly who own the furniture on the goods because if I did, I had the risk of becoming a thief, you see somebody could have just called us as a moving company on the phone and say they could you move us out of this house and they have to have a key.
We go in and move everything move it to a storage business or storage facility or something, and a four or five days later the police could come knocking and say did you move those goods out of that house. Yeah. Why did you move it well because this other person Well, they didn’t even own it? So there’s reasons for making this contract, and I’m not one to in the form of communications, I’d like to keep my contracts or agreements as short as possible. Now, later on in life, you’re going to have longer contracts and I believe you should read those and try to understand the best you can. And if you need some legal help. Go ahead and hire somebody to read that for you and with you and to be sure that you’re basically covered in a good way. Now other, we call them contracts, but there’s other names for those. In one case, it’s a very simple form and I’ve used this many times that I would call it a memorandum of understanding radiation mob your memorandum of understanding, and sometimes it’s just a minor thing.
But I think, if we’re going to go into this agreement we should understand each other so I would write down or we would write down together on one page, pay between myself and this other person, we identify that, and we describe what we’re agreeing to, and then we would sign degree. That would say that we understood this is how what was being done in that service or product this is how it was being sold, and it was basically very easy to read for both parties. I always like to add on the bottom line that says something like this. We understand that things could change from the date that we signed this but neither one of us understand. So no matter what happens, we agreed to the intent of what was written down. Another form of contract is just a bill of lading when you sell something to somebody, or you buy something. There’s where you want a one-page bill of lading you write it out fairly simple I’ve written that out in in hand on a just a piece of paper.
That says top bill of lading that says the seller name who the seller is they’re claiming to own this product and let’s say a car, and I’m now the buyer okay I’m buying this car. And so, I want to make sure that that I have this so that I’m buying it from the owner. And then in a little block of information it will show what was described maybe the vehicle or the services rendered. And then every contract should have a date on it. And this date is not only the date you signed it, it’s the date that you how long this contract is going to be in place or this agreement is placed. That’s very critical because at some time people say well I’ll do this, and then hey, they never get around to it, there’s no timeframe there’s no penalty, and the date of completion is very important. One last thing and there’s many more things I could talk about, but if you’re having an agreement with somebody you’re almost always going to need what’s called an exit plan something that allows you to leave the finish this.
It’s kind of to do with having a date, this, this, I’m buying this house for this price. As long as we close by this date. There could be another piece of paper that could extend that if you both agreed of extending it, but it doesn’t go on and on and on. But if you go into a work agreement, you know, let’s say a partnership which I’m not very pro or very positive about partnerships anyway. But if you agree to something, then you also have to have a way of exiting that agreement. Let’s say that in some manner. Someone is a park investor with you well, they have to have a way or you need a way for them to exit that agreement, based on some words or communications that says it’s fair for both people because somehow at the end of almost every encounter there’s going to be a need to end the agreement. Well, I hope this helps. That, that this is intended to help you along the line in specially when you’re getting started in business, thanks for being a part of inspiring better business.
Subscribe To Our Newsletter
Interested in getting updates from IBBTalks.com on featured content and new videos? Fill out this short form and we will send you a short weekly email to keep you informed about resources that will help you in starting, growing, and excelling in business.
***We will never share or sale your information with any affiliate and will only use it for your expressed purpose of receiving information about IBBTalks.com***