Why Contracts Have So Many Definitions

https://www.flickr.com/photos/eleaf/2561831883

Iron Horse Bicycle Race Durango Women 10″ by Eleaf from Flickr (Creative Commons License)

This week, I had a chat with someone who was concerned about the media release provision in a contract to be in a cycling race. It said by signing up for the race, you give the organizers permission to use any video or images of you, your likeness, you name, and your biographic information for any purpose without need any additional information from you. He was worried that the race organizers could sell his life story without his permission.

I’ve seen this provision on every race contract I’ve signed – and it wasn’t one of the ones I altered. This type of provision is on lots of contracts, event tickets, even on A-frame signs around the state fair. Organizers want to use the photos from their event to promote the organization and its activities. They want to be able to make you their poster child if they snap an amazing photo of you. They want to be able to caption a race photo with “Chris Jones, 37, of Truth or Consequences, New Mexico . . .”

These organizers don’t want to sell your story to make the next Lifetime Movie. I know this because (1) they don’t know your life story and (2) they’re not in the business of sell stories for the next movie of the week.

This conversation reminded me of why contracts have so many definitions. Sometimes they start with pages of definitions. They help eliminate confusion and avoid disputes when questions arise down the line.

If there is a dispute about the meaning of a word in a contract, and both sides have a reasonable interpretation of it, the court will side with the person who didn’t draft the contract, unless the contract states otherwise. (Check your jurisdiction’s rules to see if the same rule exists where you live.)

Going back to the would-be racer, I told them if they had concerns about what a term in the agreement meant, they should email the organizers for clarification. (Never be afraid to ask questions about a contract before signing it.) If there’s a dispute later surrounding the meaning of the provision, they would be able to use the email response as the basis for their reasonable belief as to what it meant and to counter any contradictory statement by the other side.

If you’re in a situation where you need to create, draft, or negotiate a contract, please call a contract lawyer for help. (This week, my editor sent me an FYI email about a company in Columbia that is selling a “Pack Of Professionally Drafted Legal Contracts” for $24. I responded with “Let me know how that $24 contract holds up when challenged in court.”)

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How to Legally Use User-Generated Content

https://www.flickr.com/photos/zoidberg72/16243539933
Selfie by dr_zoidberg from Flickr (Creative Commons License)

Here’s a question I get from companies and their marketers: What are the legal dos and don’ts for using user-generated content? These are situations where a company wants to use a photo, video, or text created by one of their fans, usually from a site like Instagram, Facebook, or Trip Advisor. Many companies merely want to approach the person through the platform where they found the content they want to use and ask for permission to use it. While this strategy is convenient, it may not be in the company’s best interest.

Using Content Within a Platform

It’s easiest when a company wants to share someone’s post within the social media platform – e.g., sharing someone’s Instagram photo on the company’s Instagram. Many social media sites build this option into the platform where you don’t even have to ask for permission to share someone’s post on another’s account.  

Of course, I’m a risk-adverse lawyer so I tell my clients to review the terms of service first to see what happens just in case it turns out the person who created the post you shared didn’t have the right to do so and now you have to deal with the fallout. Depending on the circumstances, I might contact the person to ask the person if they took the photo (which would indicate if they’re likely the copyright holder), try to verify that the original poster is complying with the platform’s rules

Using Content Across Different Platforms

Here’s where it gets a little more complicated. These are the situations where you want to take content from someone’s post on one platform and share it on a different social media site, your website, or another third-party platform. For this situation, I recommend you have a contract drafted by a lawyer. You could have them create a template for you if curating user-generated content is part of your marketing plan.

If I were creating a contract template for obtaining permission to use content created by a user or fan, I’d likely include terms such as:

  • The user owns the IP in the content: either they created it or they have permission to use it
  • The user has authority to grant the company permission to use the content
  • The user grants the company a perpetual, irrevocable, worldwide, sublicensable, paid-in-full, royalty-free license to the company to use the content for any purpose without needing the person’s consent or credit, including the creation of derivative works (or in the alternative, that the user grants the company a copyright assignment)
  • The user will reimburse the company’s legal fees and damages if it is accused of wrongdoing because the company used the user’s content

Such a contract would also include boilerplate verbiage, like a dispute resolution provision that states how the company and user will resolve disputes if one occurs.

Always Apply Reality

In any potential legal situation, be sure to apply reality. If a company wants to use a photo with two people in it, whoever posted the image may not be able to speak on behalf of the other person in the photo, and you may need release from identifiable people to avoid being accused of violating their right of publicity.

Additionally, it will likely take longer to get permission if you want to use images and other content across platforms. Be sure to build that into your timeline if your marketing plan involves using user-generated content.

There are also those who may question whether it’s worthwhile to have a lawyer create a contract for these circumstances. When there are no issues, a contract may seem superfluous; however, contracts are imperative in situations where there is a dispute and/or the parties forget the terms of their agreement. When you work with your lawyer to create you contract, make sure it has provisions that will apply to situations that are likely to occur as well as the worst-case scenarios.

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Legal Checklist to Protect Online Entrepreneurs

Labib Ittihadul from Flickr (Public Domain)

I was recently asked to create a list of what legal steps an entrepreneur should take if they operate solely online to protect their business. The person who asked appears to be primarily a YouTuber. Here’s the list I created for him: 

1. Consider having Two LLCs. One is a holding company for the intellectual property and licenses the IP to the other LLC to use it. This way if the holding company is sued for infringement, there are no assets to be collected if the holding company loses the lawsuit. We recommend this tactic for many businesses, not just online entrepreneurs.

2. Create an Operating Agreement if the LLC has more than One Owner.  Yes, this includes if you go into business with relatives, best friend, or romantic partner. This is a master document that lays out how the company will operate, each person’s obligations and responsibilities, and how the owners will address problems when they occur.

3. Move your Website to a Server Outside the U.S. The reason for doing is if there is ever a court order against the website, it will be more difficult to enforce if the website is house by a company outside the U.S. and not bound by U.S. law.

4. Register your Trademarks with the USPTO. So many legal issues could be minimized or avoided if every company properly registered their trademarks. This could include company names, product names, event names, logos, and slogans. When you have a registered trademark, you can stop a competitor from entering the marketplace while using a trademark that is confusingly similar to yours. If you have a strong international presence, it may be wise to register your trademarks in multiple countries.

5. Create a Copyright Strategy. Many professional content creators do guest posts for and collaborations with others and allow guest posts on their sites. It’s best to have contract templates for these situations that include clarification about who owns the copyright, what the other person gets, any limitations regarding the content, and an indemnification clause if appropriate.

Additionally, your copyright strategy should address when and how you can use others’ materials. You should have an understanding about fair use and where to look for materials that come with a license to modify the original as well as a license to use it for commercial purposes.

6. Consider Registering your Copyrights. You do not have to register your copyright to get your copyright rights, and you do not have to register everything you create; however, it’s beneficial to have the discussion about what you might want to register. You are required to register your copyright if you want to sue for infringement. Additionally, I frequently recommend registration to people who want to license or sell their copyrights.

7. Create an Action Plan for Addressing Suspected IP Infringement. Decide how you want to respond to suspected infringement before it occurs, so that you or your lawyer can be prepared to respond based on your desired outcome when it happens. Depending on how you want to respond, there may be things you need to do before the infringement occurs to best protect your rights.

8. Have a Contributor Contract Template. This is the contract you will use with people who contribute content to you, your site, your channel, or a social media account. It will state what rights each party has to use the content – most likely that they own it, and they grant you a license to use for certain purposes. It should also have an indemnification clause to protect you in the event you’re accused of violating another person’s IP rights or other legal wrong by using what the contributor provided to you.

9. Have an Influencer Contract Template. This is the contract to use when brands hire you so that the expectations on both sides are clear, and you state that you comply with FTC regulations. (You should probably have internal documents about FTC compliance as well.) Companies that hire influencers may have their own contracts that they want to use, but having your own template will help you analyze their contract to see how well it addresses your needs and concerns.

10. Create Website Terms and a Privacy Policy. These documents may need to comply with U.S. privacy laws, the Canadian Anti-Spam Legislation (CASL), and the General Data Protection Regulation (GDPR), and manage the expectations of visitors to your website. Many of the new privacy laws interfere with how many companies collect and use others’ personal information. These issues are complicated. Many people copy another content creator’s terms and privacy policy, but that could be a recipe for disaster if what you use is insufficient for your needs.

This may not be a complete or comprehensive list of legal steps to take to protect your business. It’s always best to consult a lawyer who understands the legal implications related to your business, preferably someone to specializes in business, intellectual property, and internet law. Hopefully this list gives you a place to start to evaluate your legal needs as a professional content creator or online entrepreneur.

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Model Release and Regret

“Subway Ballet” by J Stimp from Flickr (Creative Commons License)

Recently, I received an email from a photographer (not my client) who had a question about the validity of model releases. As I understood the situation, he hired a model (over age 18) to do a photoshoot at his studio. The model was photographed nude for at least part of the shoot. The model signed a model release and was paid for her modeling services.

After the photoshoot, the photographer censored some of the images to comply with Facebook’s rules and posted them online.  The model saw the images and was upset. The photographer asked me if the model had any authority to force him to take the images down.

The Rules of Model Releases
Model releases are standard in the photography world. In most cases, the photographer owns the copyright in their work from the moment the photo is created, not the person in the photo, and the model owns the right to publicize their own image.

The model release transfers the model’s right to publicity in those images to the photographer, which allows the photographer to use the images per the terms of the release. Usually, when I write a model release or a model release template, the model gives the photographer permission to use the images in any way and for any purpose, without restriction.

In general, once the model release is signed, the model’s given up their rights. If the model later regrets signing it, there may be nothing they can do to “unring that bell” unless the photographer is willing to negotiate another agreement – such as a copyright assignment where the model purchases the copyright rights in the images from the photographer.

Think Before You Sign
If you are a model, read the model release carefully. Never sign the release without reading and understanding it. Many of them allow for unfettered use by the photographer, including the right to license the images to others. Treat the images as if they are going to end up all over the internet, on billboards, on products or marketing campaigns you hate. Chances are, that’s not going to happen, but it could.

I write not just as a lawyer, but also a model myself. On a number of occasions, I have written and signed my own model release. Models may give up substantial rights when signing these documents, so it’s not a decision to make lightly.

What Could Invalidate a Model Release
Even if the model release was written by a lawyer and appears to valid on its face, there are situations where a model release might be invalid due to the circumstances surrounding the shoot:

  • The model was minor (Depending on your state, minors may not be able to sign contracts or they can withdraw their consent upon reaching the age of majority.)
  • The model was an adult but lacked the capacity to enter into a legally binding contract. (These people usually have an appointed guardian to sign for them.)
  • The model was intoxicated. (In general, intoxicated people can’t enter into valid contracts.)
  • The model was forced to sign the contract under duress. (You can’t get a valid contract if you use threats or force to get someone to sign it.)

There can also be instances where the photo in question was taken outside the scope of the model release and so the model release does not apply.

I get questions every day about photography, image rights, and copyright. If you are a photographer or model (or aspiring to be one), it’s imperative that you understand these issues. Many disputes can be avoided with well-written contracts and accurate information. I’m constantly doing work in this area, so if you want to keep up with what I’m doing or if you need help, you can contact me directly or check out the other posts and videos I’ve done on the legal side of photography. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

Ultrasabers v. Phoenix Comicon | Contracts Matter

Lightsabers Long Exposure by Brian Neudorff from Flickr (Creative Commons License)

Phoenix Comicon nearly started with a bang – literally. On the first day of the con, Mathew Sterling, arrived at the Phoenix Convention Center with a loaded shotgun, three handguns, and knives, allegedly intending to kill actor Jason David Frank and police officers. He was arrested and charged with attempted murder.

Following this incident, Phoenix Comicon changed its rule for the event and banned all prop weapons. Likewise, it instructed vendors who sell prop weapons to wrap them when completing a sale. This is where the problems between Ultrasabers and Phoenix Comicon began.

Ultrasabers sells replica lightsabers and was a repeat vendor at Phoenix Comicon. There was a dispute between the two, resulting in Phoenix Comicon demanding that Ultrasabers pack up their booth and vacate the premises on the Friday night of the con. It’s unclear exactly what transpired between these two companies. Ultrasabers and Phoenix Comicon each released a statement about this matter.

As a lawyer, one of my first thoughts when I heard about this situation was, “This is why contracts matter.” For full disclosure: I don’t represent either party in this matter. I didn’t write this vendor contract. I haven’t even seen it. I’m just an outsider looking in.

Contracts don’t exist for when things go right. Contracts exist for when things go wrong. A contract is a relationship management document; it helps prevent and/or solve problems between people in a relationship. It’s imperative that contracts are written with a thorough scope, and that the recipient review it thoughtfully before signing it, because if things take a downward turn, the contract will be the roadmap you rely on to achieve a resolution. Whenever a client or prospective client comes to me with a contract dispute, one of the first questions I ask is, “What does your contract say?” Footnote: The most common response I get to this question is, “We didn’t have one.”

In regards to Ultrasabers v. Phoenix Comicon, I don’t know what actually happened between the two or whether this situation is resolved at this point. I hope this issue was a reminder, or perhaps a wake-up call, to people who participate as a vendor or performer to read their contracts carefully before signing them. If you sign a contract and you later regret it, there may be nothing you can do to change the rules of that relationship at that point.

If you have questions about your contract needs, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

B2B Contracts Don’t Work in a B2C World

“Rabo Bank” by bertknot from Flickr (Creative Commons License)

Over the years, I’ve seen a number of entrepreneurs try to adapt a B2B contract template to use in their B2C business.* This is like using a hammer to tune a piano – they’re using the wrong tool for the job. I just doesn’t work. Entrepreneurs who have B2B clients or B2C clients have similar needs when it comes to their service contracts, but the nature of the relationships are drastically different. (The reverse is also true – don’t try to adapt a B2C contract for use with B2B clients.) There are several reasons to not use a B2B contract with B2C clients:

You’re Going to Scare Your Clients
If your clients are Joe Average people, not entrepreneurs, a heavy-duty business contract is going to scare the bejezus out of them. I would be worried that they will be intimidated or confused by the verbiage.

A contract is a relationship management document. The purpose is to put everyone involved on the same page. Ideally, your contract will have all terms outlined in a single document so that either side can refer to it when they have a question. And contracts don’t have to be in legalese to be effective; I recommend using plain English and keeping the terms short and simple whenever possible. The goal is to prevent confusion, not create it.

A well-written contract can build rapport with your client. An effective contract will lay out the value you’re giving them and provide security in regards to how you perform the scope of work. A poorly-written or confusing contract may make a client apprehensive about hiring you.

Unnecessary Provisions
There are provisions that may be essential in a B2B contract that would be absurd to include in a B2C contract template, such as an independent contractor provision. I’m pretty sure the Smith family knows when they hired you to take their portrait, that they knew they weren’t hiring you as an employee. Likewise, non-solicitation and non-compete agreement would be bizarre in a contract for consumers. The nature of the relationship often doesn’t warrant provisions like this.

When I write a contract template (B2B or B2C), I start by trying to envision the full relationship between the parties, how they’re going to interact, what each side is giving and receiving from the relationship, and what my client’s pain points and concerns are. That gives me a starting point for writing an effective contract that fits their needs and addresses common problems in advance.

The Value of B2B Contracts for B2C Companies
There’s nothing wrong with an entrepreneur using a B2B contract as part of their research for what they might need for their business. It can provide ideas for what terms or phrasing they may want to use. Additionally, there are some terms that are frequently found in B2B and B2C contracts, such as scope of work, payment, intellectual property, and dispute resolution. Note: even when the headings in the contracts are similar, how the provisions are written may vary vastly based on the needs of the situation where they are used.

If you need a contract for your business, don’t just use a contract from a fellow entrepreneur. Instead, if you get a template, have a lawyer review it to make sure its suitable for your needs. They can also fill in gaps in your provisions and ask questions you didn’t think to consider. And if you have business that does B2B and B2C work, consider using different contract templates to suit the needs of your clients.

A contract template is an investment in your business. If you sign a contract and later regret it, you may be stuck in that situation. If you have questions about your contract needs, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

*B2B = Business to Business
B2C = Business to Consumer

Make Sure Your Contracts Make Sense

Drawing on Parchment by Hilke Kurzke from Flickr (Creative Commons License)

One area where many entrepreneurs struggle is understanding contracts or creating custom contracts to fit their needs. Contracts are essential for every entrepreneur, but there are nothing to be afraid of. The best way I know to describe them is they are relationship management documents. They keep everyone involved in a project on the same page and hopefully are written in a way that lays out and meets everyone’s expectations and needs.

Map Out the Relationship
Before I begin writing a contract for a client, I ask them to explain the lifespan of the contract and the expected interactions between the parties. I want to have a clear mental picture of the relationships between the people involved and the expected timeline they will follow during their working relationship, including how they will address common problems in that type of work or industry. The better I understand the interactions between the parties, the easier it is to draft a contract that fits their needs, whether it’s a custom template or a contract for a specific situation.

I recommend everyone involved in a contract do the same – with a timeline, flow chart, or an outline. This will help you clarify for yourself what your expectations are, and you can use this as a guide to make sure your contract addresses all your needs and concerns.

Compare Your Vision to Reality
Once you have a contract that matches the way you envision the relationship working, compare the terms of the document to reality. If your contract template states that payment must be made within 30 days of sending the invoice but you know you’re working with a company that takes 60 days to pay invoices, no matter who they’re from, change your contract so it matches their process.

Likewise, worst-case scenario situations to make sure your what-if provisions make sense. In many contracts, I write a provision that states that disputes will be resolved in litigation. However, if you’re in a situation where a client didn’t pay for a project and owes you $1,000, it may not be worth it if you have to file a claim in small claims court, get the person served, and then go after them for payment if the court renders a judgment in your favor.

In that type of situation, it may be better to write the contract to state that the client won’t get the final work product until their bill is paid in full. The dispute resolution clause can still mandate litigation, but chances of you having to go to court to get paid drop if the client won’t get what they hired your to do until you get paid.

Contract Disputes – Your State, Your State’s Laws
Every contract needs a provision that states how the parties will resolve problems when they occur. This should include where the parties will resolve problems (e.g., Superior Court of Maricopa County, Arizona) and that the parties consent to this venue (in case you’re dealing with an out-of-state client). It should also include which state’s law governs the contract. Whenever possible, you want your contracts to state that all problems will be resolved on your turf and under your state’s laws.

Ideally, your contracts, especially your templates, will be written or reviewed by a business lawyer to ensure it is valid and complete. If you sign a contract that is legal, but has terms you later realize are not favorable to you, there may be nothing you can do to change them. Your contract should also be written in plain English so the parties involved can easily refer to it throughout their working relationship without needing their lawyers to translate the legalese.

If you want to connect with me and my experiences as a contract writer, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

Joy of Customized Partnership Agreements

Dúo by Hernán Piñera from Flickr (Creative Commons License)

A contract is a “relationship management document.” A well-written contract should put everyone involved on the same page and protect both sides. A contract should provide clear explanations to help the parties avoid confusion and prevent problems. It’s an effective way to document the priorities and goals in the relationship.

You can put anything you want in your contract as long as it’s legal. (I’ve written a legitimate contract where one party had to attest that they are “a sexy bitch.”)

The Roommate Agreement: The Epitome of Customized Agreements
One of my favorite contracts is the Roommate Agreement between Sheldon and Leonard on The Big Bang Theory. It’s a perfect example of how contracts can be customized (and how important it is to define words in your contracts.) Here are some of my favorite provisions of the Sheldon-Leonard Roommate Agreement:

  • Once a day, Sheldon must ask Leonard how he is (even though Sheldon doesn’t care).
  • No “hootennanies”, sing-alongs, raucous laughter, clinking of glasses, celebratory gunfire, or barbershop quartets after 10.p.m.
  • If one friend gets super powers, he will name the other one as his sidekick.
  • If one friend gets invited to go swimming at Bill Gates’ house, he will take the other friend to accompany him.
  • Once a year, Leonard and Sheldon take one day to celebrate the contributions Leonard gives to Sheldon’s life, both real and imaginary.
  • One friend has to put up with the other’s craziness. (Yes, we know: Sheldon’s not crazy. His mother had him tested.)

I love this contract. Not only is it hilarious, it shows what a contract can be.

My Partnership Agreement
If I owned a business with a partner, we would have the best owner’s agreement. Besides the provisions about how we were going to resolve deadlocked votes when a unanimous decision is required and the division of administrative tasks, we’d customize our contract based on our personalities and priorities. Here are some provisions I’d advocate for:

  • We won’t use vendors who are known to be sexist, homophobic, racist, or who treat their workers poorly.
  • No jerks. This applies to vendors and customers who want to hire us.
  • Our office will always be dog-friendly.
  • If we’re driving somewhere together, Ruth doesn’t have to drive.
  • There is only one way to say “data” correctly in Ruth’s presence.
  • If you’re sick and contagious, stay home. Keep your germs to yourself.
  • Neither owner is allowed to do their own taxes. Let the professionals do them.
  • We will have a monthly meeting to discuss the state and future plans for the company. If either owner is 10 minutes late or more, they have to buy the other lunch.

When I write partnership agreements, operating agreements, and bylaws for companies, I have a set of questions I make my clients answer to assist me in drafting a contract that fits their needs. One of the questions is “What else do you want me to include?” and I encourage my clients to be thoughtful and creative, based on their needs and their goals for their business.

If you’re interested in getting a custom contract, you can contact me directly or a business lawyer in your community. I regularly post about legal issues impacting entrepreneurs on TwitterFacebookYouTube, and LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

I Want to Humanize Contracts

The Anxious Type by JD Hancock from Flickr (Creative Commons License)

The Anxious Type by JD Hancock from Flickr (Creative Commons License)

A friend from my business mastermind group asked me to draft a nondisclosure agreement for her for an upcoming meeting she has to discuss a future project with a potential collaborator. She wants to be able to discuss the project to see if they want to participate in it without fear that the other person will decline the opportunity but then steal her idea and compete against her. (My friend is very smart.)

The first thing I did was grab my legal pad and start jotting down ideas for clauses to include – scope of the agreement, nondisclosure provision, non-compete provision, dispute resolution, severability, etc. As a lawyer, it’s my job to go through my mental checklist of all the terms the contract should have. I’ve always said that contracts are relationship management documents and they need to be written to cover that extent of it accordingly.

This morning, as I was walking my dog, I started looking at this contract from a different perspective – how can I humanize this agreement?

In my experience, many people are afraid of contracts or they don’t read them because they assume that they are full of legalese that they won’t understand or they’re just an annoying hurdle to clear as part of a more desirable event. When I was in law school, my friends and I went to Ladies Paintball Night; the worker behind the desk said he’d never seen anyone read the waiver prior to signing it. (We altered it, then we signed it.) When I moved to my current home, it took me hours to read the CC&Rs for my HOA. They were 78 pages long, and filled with excessive legalese I swear you needed a first-year law school education, at least property class, to understand them.

Contracts should be written in plain English, be as short as possible (cover the scope then stop), and set both sides up to feel secure in what they’re getting into. Whenever I write a contract, I prefer to refer to the parties as “I” and “you” because that’s how people speak and think. In regards to this current project, I want to phrase the provisions in a way so that when my friend presents the contract to prospective collaborators, they don’t feel like there being attacked or distrusted. This document should help both sides feel comfortable speaking candidly. Here are a few of the thoughts I have about how I want to phrase some of the provisions:

  • I would not have asked for this meeting if I didn’t think you were an ideal collaborator for this project. But because this project is not only a central component of my future business plan and projected livelihood, it’s also dear to my heart, as a business owner, it’s essential that I protect it and myself. This agreement protects you too. This meeting, regardless of whether we work together on this project, should not be a hindrance to your ability to continue your professional pursuits.
  • Although I don’t anticipate there being any problems between us as a result of this meeting (otherwise we wouldn’t be having it), this is how we will address problems should it occur. I hope neither of us is in a situation where we must resort to these extreme measures, but as business people we know we must be prepared for the worst-case scenarios, even when working with the best of expectations.

There is nothing wrong with contracts using the verbiage that humanizes both sides. In fact, I encourage it. People do business with people; therefore, contracts should be written from that perspective first. When appropriate, I also encourage clients to personalize their contracts and include a touch of humor or “Easter eggs” (because I’m weird like that). You can put anything you want in a contract, as long as it’s not illegal.

I love writing contracts, and I hope I get more opportunities to write agreements that are effective for the needs of my clients’ businesses and also who they are as individuals. If you want to connect with me and my experiences as a contract writer (including how I change almost every liability waiver I sign), you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn. You can also get access to more exclusive content that is available only to people on my mailing list, by subscribing here.

Choosing a Business Partner – Bet on the Jockey, not the Horse

Lone Star Park by Travis Isaacs (Creative Commons License)

Lone Star Park by Travis Isaacs (Creative Commons License)

When it comes to deciding who will be your business partner or a business investor, choose your associates with as much care as you would a romantic partner. When it comes to selecting these people, don’t you just look at their reputation, their track record, or their wallet. Look at who they are as a person. Look at how they work in relationships with others, their values, and their personality. If you are going to be intimately involved with this person from a business perspective, it should be someone you enjoy being around and who has values and goals that are compatible with yours.

When Gary Vaynerchuk evaluates startup owners and businesses for investment purposes, he says he bets on the jockey, not the horse. That makes perfect sense because there are times of great ideas out there but a much smaller group of people who can take one of these ideas and execute on it in effectively. As Gary would say, “Ideas are shit. Execution’s the game.

Think of your business relationships as a “business marriage.” These are people with whom you will be legally connected and have fiduciary obligations to each other. And if things don’t work out, you will need to get a “business divorce” where one partner buys the other out or when the partners decide to shut down the business and divide whatever assets are left. I’ve worked on collaborative divorces where the owners realized that they could no longer work together on a business but they could agree on what terms they wanted for their separation. I’ve also worked on contentious business divorces where each side has legal representation and the contract negotiation is longer and the parties are much more antagonistic.

In many cases, many problems in a business relationship or the business divorce could have been avoided had the parties verified that they were on the same page from the beginning of the relationship regarding their goals, how they were to run the business, and how they will resolve problems. Unfortunately, too many people use poorly written contract templates they find on the Internet or proceed without one at all. They don’t understand that it is cheaper and easier to write an effective contract with a lawyer at the big getting of a business relationship then for each side to have to hire someone to negotiate their business break up when things don’t work out.

Choose your jockey (business partner) with care. If they treat other people poorly, they will treat you poorly. If you think you can manage or manipulate a person’s behavior, you are already asking for trouble. If your prospective partner balks at the idea of solidifying your relationship with an operating agreement or investor agreement, turn and run away. No one’s money is rich enough to make up for the headaches and heartbreak that result from not having a proper contract in place. In fact, the appropriate response to a request for a contract should be something along the lines of, “Duh.”

If you want to chat more about the importance of business contracts or how to write one to accommodate your needs, you can contact me directly or connect with me on TwitterFacebookYouTube, or LinkedIn.