How to Make Collaborative Contracts: Why fair contracts are nothing to fear!

Hi, my name is Brittany Ratelle, and I'm an attorney for creatives, creators, online business owners, and I'm here to help you get legally legit and to help you show up as a more confident business owner. Today I'm going to be talking about collaborative contracts and why fair contracts actually benefit everyone, not just the person who drafted them or who might be sending them to you. This is a really threshold question and a really important thing for us to wrap our heads around, because depending on how familiar you are with contracts or what your experience has been, maybe as a consumer, as a, as a private citizen, it may need to morph, and the way that we understand contracts may need to change so that we can make sure we do some work on that mindset so that we can approach it correctly as a business owner, and how we can really appreciate contracts for the great tool they can be in protecting our own business and protecting the expectations and the complex relationships that we really have with each other as we move forward in our business. So I have to give my standard disclaimer because what kind of attorney would I be if I didn't show up and start with a disclaimer? While I'm an attorney licensed in Idaho and Utah, I am not your attorney, and this interaction is not an official attorney-client relationship. This is not official legal advice. So as we talk today, or as if you review any of my resources, please remember that if you have questions about how this applies to your individual business, please seek out a competent attorney in your local jurisdiction. Okay, let's get to it. Okay, so my point number 1, why should you use a contract? Why do we even mess with contracts at all? Contracts are the worst, right? Yes and no. Okay, I know this may come probably not as a huge shock to you that the attorney likes contracts and likes them because, you know, it's like the barber telling you you need to get a haircut. But here's— I want to lay some truths on you here. Human memory faulty and finite. Our human brains are amazing, incredible machines capable of neuroplasticity and multi-level processing in the way that we engage with information and then store that and recall. However, they are not machines, and it's been proven that our memories and the way that we record and encode experiences are colored by our own individual biases and the information that we took in, and then what happens over time. This is why, if you've ever witnessed this phenomenon, that multiple people can see the same accident, like the same car accident for example, and when they give their statements, they swear they saw something different. And their brain really believes that. And the reason is, is because our brains don't remember things in a vacuum. And so the way that we remember things can be, you know, influenced and biased by what happened before before the incident or the conversation, in addition to what can happen after. And so the way we recall something might change from the first day to the 100th day, or the 1,000th day from the time that something happened that we observed personally. This is even more exacerbated when we have things that we maybe have our hands off and that were just a conversation, and then we didn't have other hands-on and sense experience. If we didn't if we can't taste it, or touch it, or smell it with our hands, we have less tools at our disposal to be able to wrap our heads around what was actually the information, and what happened, and how did my brain categorize that and encode that. So another example we all are probably familiar with is a game of telephone. There's a reason why this is such a fun game to play, is because we know by the end of the child's game, from the end, that the message is likely to be very different than what it was at the beginning. Okay? These are just two very simple examples that show why getting things in writing is so important, okay? And why it's important because the writing becomes a memoriam, becomes something different and apart from what's stored in our brain, and it becomes a symbol that's external to what we remember and maybe what another human being on the other side and their opinion and bias remembers, okay? So that's why contracts are important, is because they are necessary in order to encapsulate and to remind and to write down complex relationships and complex inner workings and combinations between factors and if-then and logic statements, and that's what a contract does. So why should you use a contract? Okay, and probably the top hesitation I get from people is they say, well, I don't, you know, this project is with a friend, or I'm doing work with someone I have a close relationship with. I don't want to put up a wall between me and the client, me and the customer, me and my business partner. And I can appreciate this because relationships are important in business, and anyone telling you differently needs to have their head checked. So, but as important as relationships are, I'd like you to kind of challenge and see contracts as a tool in which you can memorialize and take what's great about that relationship and build on it. Not necessarily take away from it. Okay? A professional and fair contract is drafted in that it supports and encourages and clarifies for both parties. Okay? Um, it signals that you know what you're doing, that you've done this before, that you're going to do it again, that there's a systematic way in which you're approaching how you're going to be working with each other, that this isn't something you just like threw out there, um, and that you haven't given some forethought and intention behind. And we all love a good intention, okay? We all love good intentions that are matched with good execution. Having a decent contract and a solid contract, especially when you're a service provider, for example, if, you know, say you're a photographer or a graphic designer, web designer, social media manager, virtual assistant, online business manager, you know, these are really common, you know, online and service professional positions that use contracts. When you send one to your client, you signal to them, I know what I'm doing, I've thought this through on how I'm going to serve you and what the issues that may come up, the questions that you may have, I'm going to address those right here in a systematic way. And then you are free to come in and to be creative, to surprise and to delight. You know, even if there's maybe stronger, harsher terms, harsher terms in your contract, say about refunds or rescheduling, or, you know, if you don't give me approval within 5 days, you've lost that right and we can move on. You as the business owner, what's one of the greatest things about being your own business owner is you get to be fairy godmother. You know, bibbidi-bobbidi-boo, you can decide to back off from what you have in the contract. Okay, you get to wave that magic wand, but I can promise you it is very difficult to go the opposite direction. It's very difficult to be wishy-washy, to be nice, to not have any boundaries set up, and then to try to spring boundaries or, you know, circumstances or kind of consequences on people. Okay, people usually felt like they've been bait and switched. They don't— they haven't had that expectation and clarity up front. And so that those conversations and those interactions, especially with customers, can go south a lot quicker. Okay, so let's have the structure, let's have our framework, and then let's be free to do what we want to, to use that to deliver to provide extra service, extra high touches for the things that we do in our business to be supported by what's already matched in our contract. The container is clear, the timeline is clear, the homework and the milestones, how payment's going to work, it's all crystal clear. We're all on the same page. That's our big picture of why you should use a contract. Let's get into the nitty-gritty of what does a contract do and why would you want a fair one and how can you make sure that you're setting up in getting a fair contract between the parties, okay? If you're not convinced yet, well, here's another thing. If you have to convince the other party, because maybe you're on board and I've already convinced you or whatever else in your experience that contracts are a great idea, it takes two to tango. And so if you still need some help convincing someone else of how to use a contract, here are some talking points to consider, okay? Number 2, how about we clarify expectations, okay? A contract is simply listing out what is going to happen, okay? What's expected to happen and what's expected to happen if the unexpected happens, okay? What's the what-if? If X happens, then Y, okay? Let's go back to our simple math logic, and that can be listed in a contract of if the event gets canceled, which we really hope and we don't think it's going to happen, here's what's going to happen next. Okay? If so-and-so gets sick, this is what's going to happen. If we end up making a lot more money than we thought, this is what's going to come into place. If we make no money, in fact we have debts because of this project or collaboration or company, this is what's going to happen. Okay? And normally, the normal process of the way our brains work is we don't tend to think about those circumstances unless a contract prompts you to. And a good contract will have you think a little about and play a little bit of that hypothetical if game of, I don't think this is going to happen, but if it did, let me play that out in my head. What would make this go smoother? What would help us get out of this? What would help us preserve the relationship, which is likely more important than what's the money that might be at stake here? Okay, my next point, number 3, say you don't like confrontation. Okay, say the thought of sending a contract or having a contract negotiated gives you heebie-jeebies. Okay, I get it. All right, you know, these, these, these are sometimes hard skills, and depending on your personality type, your Enneagram type, and, and how you like to show up and work with people, this could make you uncomfortable. But uncomfortable does not mean it's not worth it. Okay, and here's the thing: if you can kind of rally together and make the contract and set it up right in the beginning, you only really have to do that once. To make the contract the bad guy. After that, you could just refer back to the language. You know, people not paying you on time, refer back to the language, copy and paste your payment terms. Someone asking you to do more than what the scope of the project was, copy and paste that scope of work, send it back, okay? You know, it gives you that freedom to try to avoid those uncomfortable conversations because it's not about you, it's a contract. Oh, the contract tells us we were gonna do this, this is This is what we agreed to, okay? Again, it takes it from that, you know, he said, he said, or she said, she said realm and elevates it to a new discussion of we both came together and agreed this is what was going to happen, and so we're attacking this problem together. And how is the contract supporting us and explaining how it is that's going to happen, okay? Number 4, fair contracts protect both sides, okay? Both sides. Here's what I mean by that. A good solid contract is even-handed, okay? It doesn't ask crazy terms of one party and ask the other person to give nothing. It's not a David and Goliath situation, and all the contracts that I draft for my clients and that I include in my contract shop are even-handed, fair contracts, because setting something up, putting in weird clauses, you know, really taking advantage of someone does not pay in the long run, and that's not the type of people that I like to work with, and that's not And I wouldn't draft a contract for somebody like that that I thought was being unreasonable. Sure, are there preferences or language that errs and protects one side versus the other? Absolutely. But they're fair and even-handed contracts, okay? And they are going into it assuming the best, but also verifying, you know? To use a Reaganism, trust but verify, okay? They cover the who, what, where, and why, and how much, because it's all about that money. They make sure people get paid on time, and we make sure that we know how to terminate or to kill a deal and what happens then. Okay, let's talk about point number 5. If you get a chance to solidify the deal, then you need to make sure that you get a contract in writing because the deal isn't done until a contract is signed and the check is sent, period. Okay, raise your hand if you've ever been personally victimized of counting your eggs before they hatch. Okay, of thinking that you had locked in a deal, a collaboration, you know, a new coaching contract or whatnot, and you got all excited. Maybe you even did stuff on your end. You reached out and you paid for things, or you made, made moves in your business based on and relying on that this money was going to come through, and then it fell through. It's an awful feeling. That can be, you know, protected against if you use a solid contract and you make sure that payment comes quickly. And that the deal is not booked on your calendar. You're not turning business away, and you are not making plans until we really have things set into stone. Okay, so it allows you to solidify the deal and make sure that people take the deal seriously, and they match that with their intentions and their actions. Okay, point number 6, if someone is giving you a whole lot of grief about a contract, this may be a red flag. Okay, this may be a red flag that they're not serious about working with you, or that they haven't thought through what this really entails, this kind of level of business relationship or a service relationship with you, that they haven't thought through what can happen if the unexpected happens, or that they just don't respect you, that they're gaslighting you, they're manipulating you. They're going to be the type of person who's going to come back and question your work, who's going to question your motives, question your timeline. They're going to end up being a nightmare client, okay? They will be a vampire client. They will come and suck all the energy out of the room, out of you, and you don't want them. And you want to know that as soon as possible. And so if they're being just a huge pain about signing a contract, you know, maybe believe them that they're showing their true self to you and just run away now. Just cut and run and just understand that this person is not for you. You guys just may not be a good fit for each other. And guess what? You want to know that as soon as possible and open up that slot for someone better, okay? The deal is the deal, to quote one of my favorite books and movies, Shadow and Bone. Okay, point number 7: contracts should be editable and they should be up for negotiation, all of them. Someone sent you over a PDF or it's in like a client management system, it's in DocuSign or HelloSign or HoneyBook or whatever, guess what? That's just a PDF and you can download that and open it up with your, you know, if you have the full version of Adobe or go online and search PDF to Word tool converter tool, and you can turn that into a Word document and edit it yourself. It's common courtesy to like turn on track changes, and that way as you're editing in it, the other, you know, your person on the other side can see what the changes are, and it's easier for you to go back and forth. Okay, but, um, please understand that it is nice and normal, um, and it doesn't make you a bad person to want to negotiate an agreement. Even when you want to work together, okay? The amount of times that people walk because someone wants to negotiate an agreement are slim to none. Yes, I've seen it happen, but the majority of the time in business transactions, especially when you start talking about larger projects, larger checks, larger timelines, it's completely reasonable to think that there'd be some negotiation back and forth so that we can make sure we have a fair deal, that people are both getting what they want, and that we have good compromise. Remember that contracts are just that. They're just something that someone wrote down in a document and then turned into a PDF. They didn't come down from Mount Sinai with Moses. They're not set in stone. I don't think that one came down the mountain joke, quote Arrested Development. Every contract can be negotiated, and the way we do that is just an opening move of, "I'd like to redline some things." You can even ask your other side, "Hey, do you mind sending over an editable version?" I can, so I can edit some things. It's like, shall we dance? And the other person takes your hand and then you can waltz back and forth. Okay, channel your inner Yul Brynner there. Every, every contract— listen to me— every contract can be negotiated. Okay, telling you that right now, take that to the bank. Okay, point number 8: some contracts really need to be negotiated because they're relics, they're dinosaurs. Okay, somebody found them on the internet ages ago, they fell off a truck, they were hired by an attorney at some point, and then an agencies started using them. I see this a lot when I'm reviewing influencer contracts. I see the good and the bad and the ugly. And some of these things talk about stuff that we don't even do in business anymore. You know, they're using archaic language talking about like radio ads or film ads, and this is for, you know, an Instagram or TikTok. Um, so don't assume that the other side is necessarily even trying to screw you if you need to negotiate a contract. They just might have a really old contract and they— it just hasn't been a priority and they just haven't updated it. You might agree and they might agree, but what this contract language says doesn't even match what your email chain has been back and forth. That's why you need to understand what you're reading and you need to be up for negotiating it. Either do it yourself, get some training on how to do this, look at some of my other resources on how to learn how to do that, or hire an attorney to help you, or all three. Make sure that you know what it discusses and it matches up and it has integrity to what your negotiations were in other channels. Hey, number 9, you deserve to hit send with swagger, okay? I have no doubt that you are a conscientious and a thoughtful and a passionate and smart business owner, and because you care about what you do and about serving other people and showing up and solving their problems, we don't need to be hanging on to baggage that you are not confident in what you're sending out, okay? When you send somebody an agreement to work one-on-one or when you launch a new website and products and you have, you know, your footer terms, or when you're adding on a partner into your business and you're getting investment, you deserve to feel 100% confident in that language, that you know what it is, it's fair, and that you've talked about things, that you've had, you know, some slightly weird, you know, theoretical or awkward discussions about what could happen now, um, because you've thought of things through, and that way you can avoid some huge headaches later. Okay.. It shows that you're a professional and a serious business owner, and it teaches people how they should treat you. Okay? It's going to be a stretch for someone to take you seriously if you haven't done the same. Okay? So the first thing you can do is teach people how they should treat you. Have that match with a serious contract. Okay? That's step 1 in that process. All right. And number 10, last but not least, it's never too late to sign a contract. It is never too late. Okay? It's like the old adage about planting a tree. When was the best time to plant a tree? Probably 20 years ago. When's the next best time? Today. Today. So if you've been working with somebody, whether it's been going great or middling or bad, and you want to send over a contract, go ahead. Just because you have been working together on maybe a more informal basis, you probably have a contract, meaning some agreement in place, but it's probably based on what you said in emails or phone conversations, and that there is something enforceable there. But what we're going to try to do is we're going to up-level that with a contract agreement that will actually memorialize and take us through all of the steps that will systematize how we're working with each other, making sure we're on the same page, and making sure that both people have really clear expectations about what they're supposed to do, their obligations, and what they're getting out of it. Okay? You know, and so that we have obligations and expectations covered for both sides. So please don't hesitate to have people sign something. You know, if you want to continue working together, if you've had a helper, you know, say you have a freelancer in your business that's been helping you forever. Eek! And you're like, gosh, I probably should have had them sign a contract. Yeah, you should have, but drop the shame and let's get into action. Okay, get— make sure, get your contract, get it filled out, send it over to them, and move forward with more confidence. Okay, we're not going to waste a lot of time feeling bad about not knowing, uh, you know, not knowing the questions that we didn't know. But we can move forward, and when we know better, we do better. And there's nothing that's more true than that than using contracts and doing those nitty-gritty stuff in our business that can help us show us and be more effective. Okay, I hope this tutorial has been helpful to you. If you need help with your contracts or looking for just some solid contract templates to help you in your business, whether it's a website policy or a client service agreement or an operating agreement for your LLC, you know, that business prenup for you guys both to sign, please head over to creativecontracts.co. That is my curated contract shop designed for the modern business owner. Okay, it has an online quiz where you can, you know, can go through some questions and put in what you do in your business, and it's going to spit out some product recommendations for you so you can figure out exactly what you need for your business. Okay, they're going to have color-coded fields so that you can download, follow the color codes, video instructions so that you can go piece by piece, line by line, and know exactly what you're agreeing to, especially when it comes— when you have some decision time. How are you going to handle intellectual property rights? You probably have some choices there, and I'm going to line those up, what those are on your spectrum, so that you can decide what fits best in your business. And then you're going to be finished with your document. You're going to upload it to wherever it needs to go— your website, Instagram, your client management software, your HelloSign, your DocuSign, your PandaDocs, HoneyBook, Dubsado, wherever it needs to go. We will get it out there, and you will be able to send with swag. Thanks so much for joining me. I'm Brittany Ratelle, and I hope that you understand that you are a real business owner and that you continue to show up and become more confident in owning your business in every sense of the word. Thanks so much.