How to Secure Your Business Through Contracts

Contracts are the life blood of any business. Business owners routinely make verbal agreements with their clients, customers, suppliers, vendors, and employees. But like my client, Katie, many of you have learned the hard way, the importance of a written contract.

Katie is a stylist who reorganizes and redecorates people’s homes. Katie’s client hired her to redecorate her apartment. Katie verbally quoted her client and was paid $5000 to reorganize and redecorate her home office space. There was no written agreement detailing the scope of services, payment terms, or termination of services. Katie spent a week reorganizing the client’s desk and filing cabinets and then moved on to buy accessories and accents for the space.

After the first week, the client expressed her dissatisfaction with Katie’s reorganization and asked for a full refund of her money. Katie made her best effort to satisfy her client. She spent additional time on the reorganization to accommodate her client’s specific tastes and preferences. But her client continued to demand a full refund. Katie feared legal action or formal proceedings if she did not give in to her client’s demands. So she refunded the $5000 to her client.

Katie would have been able to handle this situation differently had she executed a written agreement with her client. Legal contracts are designed to deal with such contingencies. A clause in the contact specifying the grounds for terminating the services, and limiting refunds to work not yet performed would have saved Katie from refunding the full amount to her client. Katie put in a week of her precious time and energy without being compensated for any of her work. Plus she did not take in any other work that week to service her client.

The problem is that most business owners wait for a problem to put a written contract in place. By doing so, you are jeopardizing your business, and losing money and relationships with clients. Is it really worth risking the health of your business in the long run just to save some money in the short run?

If you do not have a contract for your services or business, please reach out to us. I don’t want you to wait until you are in trouble and lose thousands of dollars for something you have worked so hard for. Call us at 646-820-1366 or email us at I am happy to have a complimentary conversation with you about your business and how to best protect it. Don’t let someone take away your hard earned money.

Working with an attorney to design your contracts can protect your business. Nupur Shah Law can help you if you have questions about what contracts you need for your business.

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