Today’s the final episode in the contract series! I’m doing things a little bit differently and will answer some questions I’ve gotten about contracts throughout the series. I offer explanations, give tips and examples, and highlight issues regarding signings, master service agreements, contract length, legalese, agreement revisions and updates, electronic signatures, and more. Then I wrap up the episode with some general suggestions to help you create or shore up your contracts.
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In this episode:
[01:38] – How should the names of the parties be entered into the agreement?
[02:50] – Danielle offers a crucial signing tip for agreements between businesses.
[03:06] – What is a Master Service Agreement (MSA) and when should you use it?
[03:56] – Danielle’s legal clients often ask her about shortening agreements.
[04:53] – Typically, clients really want a plain-language agreement and don’t care about contract length.
[05:46] – A little legalese is necessary for your plain-language contract especially regarding intellectual property ownership or boilerplate clauses.
[06:07] – If someone asks you to change your agreement, does it mean the contract is no good? Danielle discusses revisions.
[07:49] – How often should you update your contract? It depends.
[08:56] – Danielle answers a disclaimer question regarding the hire of a PR specialist.
[09:55] – Are electronic signatures valid, and what services does Danielle recommend?
[11:06] – To wrap up this series, Danielle recommends a few general action steps.
Links & Resources:
- Businessese on Facebook
- Businessese on Instagram
- Liss Legal
- Liss Legal on Instagram
Welcome to the Simplifying Legal podcast, brought to you by Businessese. I’m your host, Danielle Liss.
Many years ago, someone told me I was the least lawyer-y lawyer she’d ever met because I helped make legal easier to understand. To this day, it’s one of the best compliments I’ve received in my professional life.
If you've ever felt legal was too scary, too overwhelming, too complicated, or just plain incomprehensible, you're not alone. The Simplifying Legal podcast was created to help.
In each episode, we’ll do a deep dive into a legal topic and give you concrete next steps so you can apply it to your business.
My goal is for you to walk away from each episode thinking, oh, that was easier than I thought it would be.
Let’s get started.
Hey there, I’m Danielle. Welcome to episode 16 of Simplifying Legal for Small Business Owners. In Episode 8, we kicked off a series on contracts and this is our last episode in the series.
Today, I’m doing things a little bit differently and I’ll be answering some questions that I’ve gotten about contracts over the course of this series.
Disclaimer: As always, before we get into today’s topic, a quick disclaimer. This podcast is meant to provide you with legal information only. It’s not legal advice and does not create any type of attorney-client relationship between us. Please don’t take any action without consulting your lawyer first.
Now let’s move to the Q&A on contracts.
Parties of Agreement
First question: How should the names of the parties be entered in the agreement?
This is a great question and something that I see people struggle with.
The parties who are included in the agreement should be the parties who are to be bound by the agreement. Most of the time, if you have a business entity, it will be your business entity. If you are entering an agreement under your name, you will be personally bound.
Here’s an example of an introductory paragraph. I’m going to use my law firm entity in the example:
This Agreement is made as of January 1, 2020 between Liss Legal LLC and Green Gables LLC.
In this example, Liss Legal and Green Gables will be the responsible entities for the agreement.
Then, the authorized individual can sign on behalf of the entity. For example, I would sign as Danielle Liss, the owner and managing member of Liss Legal LLC. Anne Shirley could sign as the owner of Green Gables LLC.
This way, the entities are the responsible parties, not the individuals, even though the individuals can sign on behalf of the entities.
One tip when it comes to signing: If your business is entering into an agreement with another business, make sure the person has the authority to sign. You don’t want to run into issues later if you find out that the person was not eligible to sign the agreement.
Master Service Agreement
The next question is: what is an MSA and when should I use it?
An MSA is a master service agreement and it typically means that you’ll be working with a company on an ongoing basis. The MSA will lay out the standard legal terms. then, the parties will enter into separate scopes of work, or SOWs, which will be attached as exhibits for new projects. Those SOWs will then be incorporated as a part of the agreement.
An MSA is often preferred when there will be ongoing relationships since it doesn’t require a full contract every time you have a new project. It’s often a great way to simplify legal for your business if you have these types of relationships. I often prepare MSAs for my clients with agencies or ongoing creative work.
Contract Term and Provisions
The next question is something I hear regularly from my legal clients. Can I shorten my agreement? I don’t want it to be so long.
This answer usually requires that I do some digging. Because often the agreements are not that lengthy. Usually, there is something else about the agreement they don’t like.
For some clients, they don’t understand their agreement because it has too much legalese. Or, they might not understand why clients are requesting changes to certain provisions.
If you are truly looking to make your agreement shorter, it may be that you want to play with formatting. That way you don’t lose anything important. I feel like that sounds silly, but you can often condense things if you want to go to columns.
If, instead, you want to shorten the agreement because you feel it’s too complex, this is a great time to work with a lawyer. You can determine which provisions are most important for you and you can get rid of the stuff you don’t need.
However, what I typically discover is that my clients don’t care about the length of their contracts – what they really want is simplified language. In other words, there’s too much legalese. It turns out that what they really want is a plain-language agreement.
I find that formal agreements are fine for many businesses. For some, they are an absolute requirement. If you’re a service-based business working with a large corporation, usually, you’ll want a more formal agreement, which will then be reviewed by the company’s legal counsel.
But, if you want to include less formal language, that’s also possible. I regularly do this type of work for my Liss Legal clients. They want to make sure they’re protected, but they want more simplified language.
One thing to keep in mind – I typically tell my legal clients that I can usually get their agreements to 85-90% plain language. There are always going to be some pieces that you want to reflect the legal language to ensure that you have what you need. Especially when we’re talking about intellectual property ownership, which we discussed in episode 13, or the boilerplate clauses, which were featured in the last episode.
The next question is: I’ve been using the same agreement for years with no issues. Someone asked me for a change. Does that mean my agreement isn’t any good?
First, let’s address the big question: No, this doesn’t necessarily mean that your agreement isn’t good. Without seeing the agreement and knowing about your business, I can’t say that for sure.
However, if the agreement has served you well in the past, it’s probably fine. Doing a review on your agreement is never a bad thing, but simply getting a request for revision isn’t enough to state that it isn’t sufficient for your needs.
Now, let’s talk about revisions because this is something that comes up a lot for small business owners, especially online business owners.
It’s extremely common to get requests for revisions to an agreement. It was a surprise to me when I started working with more online business owners that requests for revision were fairly uncommon. Many people seemed to expect that a business would take a contract as written or they wouldn’t enter the deal.
If you get a request for revisions to your agreement, look over the requested changes. If they aren’t a big deal for you, consider making the changes. If you don’t agree with them, you can make a counteroffer or simply reject it. It will then be up to the other party to determine whether or not they want to move forward.
If you’re on the other side and receiving an agreement from someone, if something doesn’t work for you, don’t be afraid to ask for revisions. The worst thing that can happen is they say no and you then have to determine if you still want to move forward. You never have to sign an agreement that doesn’t work for your business.
Updating Your Contract
The next question is how often should I update my contract.
This is a great question and here is the ultimate lawyer answer: it depends. There are a few times when you will want to review your contract to see if it needs changes.
- First, if you know of a change to the laws that might impact your business, then you definitely want to review it for potential changes.
- Next, if you have started offering a new product, package, or service, then you may want to make a change.
- And, finally, if issues arise with your clients or customers, consider whether it’s something that could be addressed with your agreement. Could you make a simple adjustment to your scope of work or add another provision that would help you avoid the situation in the future? If so, consider making that change.
Sometimes, I have clients who will simply say, my business has grown and I haven’t looked at my contract in a while. Can you review it to tell me if you see any room for improvement? So, it may not be that something in the current contract is wrong, but it may be that there are things that can be added to give you an even stronger agreement.
The next question is a good one – I was hiring a PR specialist for my business and the contract included a disclaimer. What is that?
I’ve seen disclaimers used in many ways in the past. For this question, the disclaimer was likely someone who was disclaiming any liability for results.
This type of provision may state something like: There is no guarantee that the Client will see positive results using the techniques and materials provided by Company. Company disclaimers liability for policies or practices that Client implements based on the services provided by Company.
The main goal of this provision is to protect the person from liability if the client doesn’t get the results that they are looking for.
The next question is about electronic signatures. Are they valid and what services do I recommend.
Generally, yes, electronic signatures are valid. There are still some types of agreements that may require a wet signature, like when something is notarized.
However, there is federal legislation from 2000 which states that electronic signatures are valid. So for the average contract that you’ll enter for your small business, an electronic signature will likely work.
There are a lot of good options for esignature services and it may depend on the volume of documents that you need signed. I’m a big fan of HelloSign and DigiSigner. If you need a bigger enterprise solution, Docusign is a good option.
If you use CRM software, many will include esignatures.
Some of these services offer free trials, so test and see if you like the software and if it is easy for your clients to use. You may want to look for features like loading templates or bulk signing.
Since this episode is a little different as we wrap up the series, I have some very general action steps regarding contracts.
- Get your contracts in writing and make sure they cover all aspects of the relationship.
- Don’t be afraid to ask for changes. Remember, the worst that can happen is that the other party says no.
- If you don’t have a contract, definitely visit Businessese to check out the templates in the shop.
- If you’ve made changes in your business, consider whether you also need to make changes to your existing agreements.
- As always, if you’re not sure of what you need or you’re struggling to read or negotiate an agreement, talk to a lawyer.
I’m also going to include a plug for my law firm. If you need assistance with contracts for your business, especially if you want them translated into plain language, I may be able to help through Liss Legal. You can learn more at lisslegal.com or you can email us at email@example.com.
Thanks for joining me for today’s episode of the Simplifying Legal Podcast. Please subscribe if you haven’t already.
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Thanks for listening and we’ll continue Simplifying Legal on next week’s episode.