Handshake deals are for amateurs. Protect your business with proper contracts.
The 7 Contracts Every Business Needs
- Service Agreement / Client Contract - Scope of work, deliverables, timeline, payment terms, revision policy, termination clause, liability limitations.
- Non-Disclosure Agreement (NDA) - Definition of confidential information, obligations, duration, exceptions, remedies.
- Independent Contractor Agreement - Scope, payment, work-for-hire clause, tax responsibilities, relationship clarification.
- Partnership Agreement - Ownership percentages, responsibilities, profit sharing, decision-making, dispute resolution, exit strategy.
- Non-Compete / Non-Solicitation Agreement - Geographic scope, time period, restricted activities (enforceability varies by state).
- Terms of Service - User rights, your rights, liability limitations, privacy policy, dispute resolution.
- Invoice and Payment Terms - Due date, late fees, accepted methods, currency.
Key Contract Clauses to Always Include
- Scope of work (prevents scope creep)
- Payment terms and late fees
- Termination clause (how either party can exit)
- Intellectual property / ownership
- Limitation of liability
- Dispute resolution (mediation before litigation)
- Force majeure (unforeseeable events)
- Governing law (which state's laws apply)
What a Contract Is Doing When Nothing Goes Wrong
Most contracts are never enforced. Their day-to-day job is to make expectations explicit so that two reasonable people do not drift into a disagreement neither of them intended. Written that way, a contract is not an act of distrust — it is the clearest possible statement of what you both believe you agreed to.
The Clauses That Do the Most Work
- Scope and deliverables. What is included, and a short explicit list of what is not.
- Payment terms. Amount, schedule, method, what counts as late, and what happens when it is.
- Term and termination. How it ends normally, how either side exits early, notice required, and what is owed at the exit.
- Ownership. Who owns the work product, and when ownership transfers — often on final payment.
- Confidentiality. What is confidential, for how long, and the obvious carve-outs.
- Liability. A cap, usually tied to fees paid, so a small engagement cannot create an unlimited exposure.
- Dispute resolution and governing law. Which state's law, and where a dispute is heard. Both matter far more than they look on the page.
The Agreements Most Small Businesses Actually Need
- Client services agreement — your main one, with a scope attached per project.
- Independent contractor agreement — including who owns what the contractor makes.
- Mutual NDA — short, mutual, and boring; anything complicated should be a lawyer's draft.
- Statement of work — attached to the services agreement rather than rewritten each time.
- Payment or deposit terms — even for small jobs, in writing.
The Three Mistakes That Cause Most Trouble
- Starting work on a verbal agreement because the client is nice and the job is small. The small jobs are exactly where scope drifts most.
- Signing the client's paper without reading past page one. Their template is written to protect them. Reading it is not adversarial; it is the job.
- Leaving payment timing vague. "Upon completion" invites an argument about what completion means. Tie it to a defined milestone.
Redlining Without Damaging the Relationship
You are allowed to ask for changes. Do it early, do it in one pass rather than five, and explain the why in one sentence per change: "We cap liability at fees paid on every engagement — it is not specific to you." Reasonable counterparties expect this. The ones who react badly to a professional redline are telling you something useful about what working with them will be like.
Storage and Signatures
Keep executed contracts somewhere you can find them in under a minute, named consistently with the counterparty and the date. Electronic signature is generally acceptable for ordinary commercial agreements, and it saves the version confusion that kills paper workflows. Save the fully executed copy — not the draft you sent.
DISCLAIMER: This is general educational information, not legal advice. Have a licensed attorney review any agreement before you rely on it.