Ep. 46 | Do You Really Need a Contract for That?

Even if you know you need a contract for your big client projects, there are probably some situations that have you wondering, "Do I really need a contract for that?" Tune in to figure out which situations actually require a contract and a few questions to ask yourself when making the decision.

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Transcript

SPEAKER_00 0:00

Today, we are going to be talking about a common misconception, something I hear a lot and feel the need to adjust some thinking. So hear me out on this. There are a lot of business owners who think that contracts are just not necessary, that only people who are really stuffy or really scared use them. I'm not gonna try to convince those people that contracts are necessary. If you're here with me, you at least buy into it a little bit, right? But what I want to talk about is this idea that kind of goes along with that of, well, okay, fine, I'll use one-on-one contracts for my done for you clients, for my coaching clients, where we have really big projects or it's a retainer or something is ongoing. But if it's just a little one-off project, it's not always necessary. So, what I want to talk about today is finding that line. Where is that line of okay, this is a big important thing, and I need a contract for it, versus, well, this is a small informal thing and I don't need a contract for it. Make sense? Okay, let's do it. Hey, I'm Amy Nestheim, licensed attorney for online business owners and founder of my own business, Artful Contracts. You're listening to Legal Made Easy, the show that makes the legal aspects of online business easy to understand and implement so you can grow your business with confidence knowing you've got it all covered. Let's dive in. Okay, to find that line, to find that point where you decide that this situation is not important enough or not significant enough for me to use a contract, first we have to understand what a contract is and what it does. At a basic level, a contract is just a piece of paper that outlines the rules of a relationship between two people. It tells both sides of a relationship what is required of them, what they promise to do, what they promise not to do, what is expected of them. It just outlines expectations so everyone is on the same page, knows what to expect, knows what they're supposed to do. So that if something goes wrong, if something does not happen the way that it was supposed to, you have a record of what was agreed to and you have action steps to take to fix whatever it is that went wrong. So what this looks like, let's say you're a service provider, that means your contract is an agreement between you and the client in which you agree to provide a service and the client agrees to pay you. That's the basics of it, right? There's value being exchanged on both sides of a relationship. You provide the value of the service that you're providing, the client provides the value of the money. It gets more complicated from there. The client also agrees to give you certain information, you agree to provide your deliverables in a certain format or on a certain timeline. And then you can also, of course, put the legal protections in there for things like limiting your liability, making sure the client knows there's no refunds, etc. It gets more complicated, but at the basics of it, it's two people coming together, each offering something of value to the relationship that the other one wants, and then writing down what the terms are, what the conditions are for that exchange of value. I'm laying it out that way intentionally so you can see that when you have a contract, it comes down to two people, one on each side, each giving something of value to the other. And the contract is there to put the rules around that exchange of value. So when you put it that way, two people exchanging value, that applies to a lot more relationships than just your one-on-one client relationships. That applies when you have people purchase a packaged knowledge product, a digital product, like a course, a PDF download, an ebook, template bundle, or something like that. There's value being exchanged. They give you money, you give them the product. It applies when you have a guest on your podcast. It's not money, but the value being exchanged is they're giving you their interview, they're giving you their knowledge, and you are giving them a platform. It applies when you are being a guest in someone else's program. If you're giving a presentation to another person's audience, they might pay you for that presentation, they might not. So the value there could be money in exchange for your expertise, or it could be your expertise in exchange for exposure to their group or an opportunity to pitch your services to their group. Okay, so you get the idea. Two people exchanging value. If you want to have rules around that exchange of value, that's when a contract comes in. So that means the question then, are you working with someone else? Are you exchanging value with that other person? And do you care about there being rules around that exchange of value? That is how you figure out if you need a contract. Now let's look at some easy ones on either side. Basically, if the value being exchanged involves money, generally a good idea to have a contract. If you care about getting paid, or if you're paying someone else and you care about getting the value that is agreed to out of your money, getting your money's worth from that relationship, having a contract is really important. And that means that the opposite is true. If you don't care about the type of value that's being exchanged, then there's no reason to have a contract. If you don't feel like you need any rules for the exchange of value, then there's no reason to have a written contract. Now I want to caution you from going straight to that because there might be more things being exchanged than you realize. There might be more consequences than you realize. So you really have to think that through before you make that decision. So just a quick example of that might be if you are going on an Instagram live and doing an interview with someone else. There's no money being exchanged, you're just both benefiting from the exposure to the other person's audience. So there's value there, each of you having exposure to the other's audience, but it's a pretty straightforward exchange. You show up on the at the time that you say that you're going to show up, you participate in the conversation, and then that interview lives on the grid or on Instagram. Seems pretty straightforward. Maybe you don't care about what happens with that interview afterwards. It's just published. But if you do care about what happens with that interview, that's when a contract would be important, even though there's no money being exchanged. In that situation, the things you might care about are does it matter to you if the other person downloads that interview and uses it in a different context? Do you want control over how that interview, how that video is used in other places, how long it stays on the app, whether they break up that video into audio content and use it on their podcast. If you don't care, fine. But if you do care and want control over those things, then that's when a contract is important, and that's what a contract can help you with. So in that example, the value being exchanged is exposure to someone else's audience and also the ideas, the concepts, the opinions that you share on that interview. And that is something that comes up a lot. That is your intellectual property, and that is something that I really want you to consider. Okay, do I want control over how my intellectual property is used in this case? And if so, then yes, you need a contract. Another way that might come up is with a podcast. If you have a podcast and you have a guest interviewing on your podcast, they are providing you with their ideas, their expertise, their voice, and you are providing them with a platform. That's the value being exchanged. What you might want control over is the fact that you can publish and use their expertise and voice and knowledge and how long you can use it and where you can use it, you want to make sure that you have control over that, even though they contributed to it. So that's where a podcast guest release comes in handy because you make sure that they're not going to come back three months later and say, actually, I changed my niche. I want you to take that episode down. If you don't have that release, if you don't have that contract that says you're allowed to use that episode content however long you want, in whatever way you want, and their name, their voice, their business name, which automatically they have the right to control. If you don't have a contract saying that you actually get it in this instance, that you're the one making the decisions, then you might end up having to take that episode down. So here's the bottom line: a contract comes into play and is important when you're exchanging value with another person. That value may or may not be money, it might be content, or it might be something else entirely, it might be exposure, it might be a discount, it might be product, or even an exchange of services. If you care about the thing that's being exchanged, if you care about the value either that you're giving or that you're receiving, and you want to have control over it, or the things that you do with that value after you receive it, the things that they do with the value that they receive from you. If you want control and you want to put parameters or rules or boundaries around that exchange of value, that is when you need a contract. So if you're thinking this through, that goes way beyond just a one-on-one client contract. That goes way beyond working with done for you clients, coaching clients, consulting clients. It seeps into a lot of different areas of your business. So that means yes, you need one-on-one contracts with clients. Yes, you need contracts with group clients in a group relationship because that's a different relationship. There's different value being exchanged. It's not going to be the same kind of contract. It means you need a podcast guest release. It means you need a speaker agreement if you're ever having speakers come in and present to your groups. It means you need contracts when you're selling digital products or courses or membership. It means you need contracts with your affiliates if you have an affiliate program. And you need contracts with any service providers or assistants or staff that you hire. And each of these contracts are gonna be a little bit different because the relationships are different, because the value being exchanged is different. And the boundaries, the rules that you put around that value being exchanged are also different. If that sounds like a lot of contracts, because I just listed only a handful, you're gonna need probably a lot more than that, realistically. If that sounds like a lot, don't worry. I got you. Tomorrow, as of the day this comes out, Valentine's Day is tomorrow. I am having a 48-hour only Valentine's Day sale on my legal template membership. Legal Templates Unlimited Monthly is my membership that gets you access to my entire contract library. So that includes all of the contracts I just mentioned, plus about 25 other ones, your website policies, your one-on-one client contracts, group client contracts, digital product contracts, contracts for hiring, for affiliate programs, for guest speaking, for VIP days, for your marketing, and a whole bunch of other stuff. The membership is 20% off. The membership is 20% off for three days only. That is February 14 to 16. And I've never done this before, but that 20% off applies to every single month that you're a member. It is an ongoing discount. So if you're listening to this and realizing there are a lot more contracts you need than you thought, uh, you can get them all in one place. Hop on into Legal Templates Unlimited Monthly during our Valentine's Day sale. You can find the direct link down below with the discount in the show notes, or head over to my contract shop on my website at artfulcontracts.com and use the code BEMINE. That sale is just Valentine's Day through Friday, February 16th at midnight. If you have any questions about whether this membership is the right choice for you, or about the contracts that are included inside, if you want to if you're looking for something specific, please send me a DM over on Instagram. My handle is at Artful Contracts. Or if it's easier, just send me a DM and I can make sure you have that discount code and the direct link to that. All right, that's all for this one. I'll see you next time.