If you don’t understand contacts, you’re aleady losing money and making your business way more stressful than it has to be.
Here’s what we mean:
Simply put, contracts align your vision with your customers and collaborators. At their most potent, contracts prevent disputes and elevate your working experience. But too many creative entrepreneurs get sidelined by a handful of contract myths that ruin it all.
We’re lawyers who have been working with creative entrepreneurs for over a decade, and we know how these myths complicate everything and steal opportunities.
Here are the myths we distilled so you can learn to avoid them in just a few minutes.
These 7 myths and misunderstandings about contracts stifle your business:
All contracts have to be in writing
You can enforce a verbal contract.
This means that people often unwittingly agree to things they wish they hadn’t or don’t understand, and they still have legal rights even where nothing was in writing. A problem arises because, without a written contract, it’s tough to prove what everyone agreed to. The difference in what everyone remembers leads to legal conflict that nobody wants.
Given this, it’s extra important to put things in writing so everyone has a record of what they agreed to.
You don’t need a contract with friends
You need a contract even more when dealing with friends.
You have a relationship to protect. While everyone might trust one another, many friendships have been broken because not everyone was clear on expectations and responsibilities. That makes it even more important to have a contract with your friends.
If you value your friendship, use a contract when doing business.
You can’t change a contract
You can always modify your contracts.
Things change, and needs change—and that’s alright. However, people run into issues when they don’t have a contract that explains how changes work. This leaves people to argue instead of collaborating to change things.
You can change your contract, and you should have an agreement that states exactly how you do that.
Contracts will fix communication issues
Contracts rely on good communication.
If your business has communication issues, a contract won’t fix them. Contracts work best when there is an actual meeting of the minds and an aligned vision. That means that if you and your collaborators are at odds and can’t communicate, a contract won’t solve the problem.
If there are communication issues, engage in frank and collaborative communication first, and then put the understandings in writing.
Contracts are about taking people to court
Amateurs think contracts are about taking people to court if they do something wrong.
Professionals know that contracts are about preventing legal problems like that in the first place. Using a contract shows you care about having your business relationships go well. By investing time, money, and energy in contracts, you are investing in a successful relationship – not looking for a way to take people to court.
Ironically, having a contract makes it less likely that anyone will ever have to go to court.
Contracts have to be complicated
You can scale your contracts to fit the purpose.
You can do small deals with a minor contract and big deals with a big one. Not every contract needs to be a legal monstrosity. In some cases, a short one-pager will do.
If you’re unsure which is correct, talk to an attorney.
A generic contract template is enough
Most contract templates you find on the Internet are trash.
Yours should be drafted by an attorney and accompanied by materials that explain what it does and how it’s used. That’s because having a contract template you don’t understand or created by a well-meaning amateur can create more problems than it solves. You owe it to yourself to get the highest-quality contracts you can.
If you want an excellent contract template, get one that an attorney creates and that you can easily understand.
How to take the next steps with contracts
We’ve worked with many creatives, so we know that contracts feel intimidating.
However, we’ve also seen creative entrepreneurs blossom when they take the time to understand contracts and use them correctly. By reading this article, you’ve already taken the first step along that path. We encourage you to go further because we want to see you grow.
The easy way to do that is to start learning more about contracts by downloading our Creative Business Legal Roadmap, which discusses contracts (and other legal stuff that matters to all creatives regardless of where they are in their business journey).
Grab it here for free:
