How to Write a Creative Legal Contract Without a Lawyer (Get Protected!)

Hi, I'm Brittany Ratelle, attorney for online business owners, and I'm so excited to be here to help you get your business legally legit. I am a business and IP attorney, and I've been helping clients for more than 10 years in this space, and I'd love to talk to you today about how you can draft a contract without an attorney like me. And I know this might sound a little funny coming from a practicing attorney. However, I know the reality of being a startup business. As a a small business owner myself, and I know sometimes resources are scarce, including money. And so I want to make sure that I'm outlining today what you can do to actually draft a solid agreement to get it signed and to get it in a place where it can protect your business. As with all of my content that I offer online and my resources, while I hope it's helpful for you, it's for informational purposes and it is not official legal advice. While I am an attorney, I'm not your attorney. So if you have any questions about how this applies to your business, please consult with a licensed professional. Wherever you live in your jurisdiction. So let's get into it. Point number 1: contracts don't have to be written by lawyers or attorneys. I know this might seem obvious or not to you, but I want to clarify there is nothing special or magic about having a lawyer touch a contract at any stage in what it might be. It's not illegal for you to draft your own contract. It's not illegal for you to find a contract on the internet, for you to get one from a friend, for you to receive one in a business transaction, and for you to use it. In fact, all attorneys use copy and paste. No one has had out there drafting a contract from scratch as if they were Ernest Hemingway. Copy and paste is a lawyer's best friend. However, something you may want to consider is looking at where your contract came from and if you understand what's in the terms of your contract. That's the most important part of having a contract. A contract is just an agreement between two or more parties about what's going to happen. What are we talking about? What are our promises and expectations for each other? However, it needs to be said for that to be clear and understood, that is what's going to be the most successful way to put boundaries around a business relationship. Truth number 2, a contract doesn't have to be in writing. Now, this may be good news and bad news for you. Let me explain. In most states, there are certain kinds of agreements that do have to be writing because of a legal doctrine called the statute of frauds. They usually include real estate contracts, contracts that deal with services that are going to last more than a year, and sometimes a transaction above a certain threshold of money. We're going to assume for today's purposes, we're not talking about those deals. You're likely an online business owner. So those transactions are probably not the kind of deals that you're doing, whether you are buying services or hiring other people, or you are the one providing goods or services to clients or customers. You are the business provider, and that's the kind of contract that you might be wrangling with day in and day out. And it's most likely that those contracts don't have to be in writing. However, and you knew there was gonna be a however in there, 'cause I am an attorney, why we like to have those contracts in writing and why that can be super helpful is that people can remember conversations differently. Even when we have recorded conversations, especially if they're not recorded and they were phone calls or Zoom calls, people can have a different experience of that conversation. You've probably seen this phenomenon play out in real life when you've seen different people comment and give witness statements about an accident. You have multiple people who saw the exact same thing, but they have their different perspective, their context, their feelings of what happened before, maybe what happened after, where their brain and heart and mind and body was at at that point, and all of that can inform their experience where they, to their truest of truths, might actually have a different experience and a memory and a context of what that communication of what that accident saw that means to them. The same thing can happen with a discussion about our business expectations and how we're going to be working with someone else. While a contract doesn't have to be in writing and certainly doesn't have to be in ink and paper, e-contracts are definitely enforceable. Don't let anyone tell you otherwise. And even what we call clickwrap agreements, or shrink-wrap agreements, which those are the agreements that I'm sure you're familiar with that you've probably like half awake fumbled and checked the box on in your phone when it has to update at 3:00 AM. Those agreements can be enforceable. There are some that obviously are challenged just like all things, but for the most part, those agreements can be enforceable. But the reason why we'd like to have them in writing is because it's a lot easier and a lot less time and money and resources to be able to demonstrate and show evidence that the other person, the other party, agreed to what you were agreeing to and agreed to what you had set out in terms of boundaries in that agreement. So contracts don't have to be in writing, but it's a really, really, really, really good idea if they are. So that leads us to truth number 3. If we agree that contracts don't have to be drafted by lawyers, but lawyers can certainly help and we'll talk about why, and contracts don't have to be in writing, but it's probably a good idea to have it in, then when do you know when to use a lawyer? When is it worth the time and money? Resources are scarce in a startup business. Business, even startups that have been around for a while. There's usually always sexier, more fun, and what seems like more important to things than to spend legal time and money on legal resources and getting legal stuff for your business. Let me tell you a little story. A business owner came to me and she had been working a personal brand, had built a really successful Instagram following, and she had someone who was working with her in her business, and they kind of dropped around the term partner. Mistake number 1, they had created some products and helped create some things together. This business Partner had helped with some videos, was supposed to have some extra connections of how to do that right. And anyway, he was helpful and, you know, helped make some money together. And they said at the time, hey, let's pay out on these online courses 50/50. So they did that for a little bit. Fast forward, the business changes, it morphs, it's an online business. And you and I both know that things can change pretty quickly, right? Ferris Bueller was very prescient with that advice. And suddenly what was online courses needed to be reformed, and now we're going to be turning to a membership and merchandise and experiential events and a coaching program and, and, and other products we're going to spin out of it. This video production guy who thought he was a partner says, because I helped you with those online courses, I think I get 50% of all products that you ever create with your brand forever. For forever. Imagine Smalls from The Sandlot. You can imagine my client's surprise when she said, we didn't have an agreement that said that, we didn't sign anything, that was never my understanding. And then there's confusion about a LegalZoom binder that maybe was signed and maybe not. Moral of the story, it turned into a 6-figure legal fight that my client had to engage with and wrestle with because there was not a clear agreement about a partnership. There was not something in writing about how they were going to get paid, who was going to own what, what was the intellectual property that was being put into the business and what was owned separately, what were the expectations, how is it going to be capitalized, how is equity going to be distributed and decision-making. All kinds of questions that would have been answered with a clear contract, a very special contract called an operating agreement or a partnership agreement, which is what my client should have had in this situation. She came to me after the fact, which is why all of this wasn't set up. So that's just one story, and I could tell you dozens of more. Unfortunately, when you work in the space as a lawyer, people bring to you their horror stories, and so you have to be the storykeeper of those and keep them. And you hope, as much as it bums you out to hear from experiences, that by sharing that in a way that's obviously not breaching confidentiality, but in a way that can help educate and let people skip over maybe that trench in their own business. We know that as business owners, there's going to be up and downs. There's going to be a huge learning curve. We're hopefully going to have new and better problems every year in our business, right? That's the game, not to be rid of problems, but to have better problems. But there are certainly some problems that you don't have to have and you don't have to sign up for. And if there's a way that we can help you skip over that and to get the wisdom of other people and be in a place where you can acquire that and have a short circuit to the end, you know, and go up that chutes and ladder and not have to go down that long chute, and let's make sure we're doing that. Again, back to our question, how can we draft a good contract? So I'm going to give you the keys to the city right here from one attorney. I'm going to make sure that if you are drafting a contract, you're reviewing a contract, negotiating one, what should you be looking for? What are the top tips for making sure it's a good one? Let's first start out is that a contract should be clear and understandable by both sides. A fair contract is nothing to fear. And if people start to be really weird about having a contract, that's something to fear. That's actually a red flag and something you want to ask some more questions about of why don't you think we should have a contract? Do you not have questions about how we're going to be working with each other? So if someone comes back to you and says, oh well, that was all been email, or that was in a video, or that was taken care of in some different container, great, that's awesome. Why don't we just make sure that that information we've agreed to and make it easy for us so that there's just one-stop shop for us to go back and make sure we're on the same page here, literally. So a good contract should address the who. It should label the correct parties to a transaction, including their business entities. This is a mistake I see I see a lot of people making, and they don't put the correct name of a business. Now, if you've watched some of my other videos, you know that you are a smart business owner and you should have an LLC set up to protect your liability and put a nice boundary between your personal money and your business money so that it's a business problem, not a personal problem. If you have an LLC, you have to use that LLC when you enter into a business contract. You want to make it clear that Brittany Ratelle LLC is hiring the videographer, not me. I'm at the mercy of the LLC just like everyone else, and if you have a problem, you can take it up with that LLC. Am I going to be the one likely answering the phone? Yes, but again, it's that separation that gives you space to be able to handle it correctly and to be able to preserve and safeguard your personal assets. That's all that important to make sure people can't pierce the corporate veil. Sounds really scary, but it's not something you want to happen in your business. Next step is the what are both parties doing in this deal, in this business working relationship? What are the expectations? What are the services that are going to happen? That's called our scope of work or state statement of work. It should be very specific and not vague. What IP or intellectual property is being created? Who owns that? What can they do with it? How long do they get to use it? Are there any restrictions about what they can do with it or what they can share about it? All of those questions should be answered by a clear contract. How about the how? How are approvals going to work? How is homework going to work? Do either parties or both parties have homework or milestones, things that they need to do to keep things moving along? On the timeline that we need to? Are you going to be sharing passwords or access? What are the assumptions of this A needs to happen for B to be able to happen? And you want to be able to walk that through so that you can answer questions and really be able to give confidence to the person on the other side that you've thought this through, that you're methodical and systematic in the way that you've approached this relationship, that you've done this before, and if you haven't, and that you are giving them a lot of confidence that you, you've thought through how this relationship is gonna work from beginning to end. And that confidence really allows you to be able to close the deal, close the sale, and give people a lot of confidence that it's gonna be a healthy customer interaction on both sides. Payment, obviously people's favorite part, right? To make sure, and you wanna get this right because if we get the money wrong, you know, more money, more problems. We are asking for issues. And this is obviously where most people get into disagreements that then turns to uglier disputes and sometimes full-out litigation. So we wanna have a really clear, how is payment gonna work? Are there payment milestones, little payments that are gonna be along the way? Does somebody have to invoice the other person? What is the payment format? Is it check, money? Is it gonna be routing? That's gonna be a wire transfer? What makes a payment late? Are there late fees? Are there attorney's fees or collection that's gonna be involved if people aren't paying on time? You wanna make sure you're aligning incentives here because people do what they're incentivized to do. And if there's no penalty for paying late, some people will pay late and you will not always be good about seeing beforehand and predicting who that's going to be. And then last but not least, explore those what-ifs. Try to put on your oracle hat, push yourself far into the future and think about, hey, what if, for example, we were living in unprecedented times? What if, just for example, just, just go with me, there was a global pandemic that shut down the world as we know it, where goods and services could not be delivered as people expected them to be. Always couldn't get materials. We couldn't have access. We couldn't be in certain places. This is force majeure land, and we all lived it through 2020, right? In 2021, when that happened. And now going forward was a good reminder to people to check your contract. What did it say if people get sick or they get hurt, or if they miss their flight? What is that going to look like? What happens if someone didn't do the original work? What happened if they copied somebody else and they weren't supposed to, or if they cheated? What happens if someone has fake followers and you find out about it and everyone else was relying on this influencer count? What happens if people don't show up when they're supposed to, if they're late for their call or late for their event or late for their meeting? All of that should be covered in a contract because while we don't expect the unexpected, we should not be surprised that life finds a way, right? Good old Jurassic Park. And we should be prepared when that stuff happens to know that there's a procedure and there's a system to follow through of how is that going to be handled. And, you know, we prefer the devil we know over the devil that we don't. And so we want to put that in a contract. Now, I know you might be thinking, well, that sounds like a lot of stuff to think about, Britton. How am I going to know what's likely to happen in a deal, whether I'm a graphic designer or photographer, I provide goods, I'm a coach, I'm an author, I'm an influencer or creator, a podcaster. You might wanna work with an attorney who knows something about those industries. And here, not to be clickbaity, here comes to the crux of the issue. While you don't have to work with an attorney to draft a contract or to make a contract enforceable, and I would agree there are some attorneys that might waste your time and money, a good attorney, an attorney with experience in your industry and your type of business will save you both. They will save you time and money on the front end. And certainly they will save you time and money on the back end. They will help you be proactive instead of reactive. To use medical analogy that you're taking your vitamins, you're going to the chiropractor, you're getting your checkups, you're doing the things you need to in your business so you don't end up in the ER. Because you know what the ER is? It's expensive and it's stressful and it's late nights and it's tears. And you don't have to walk that path. And if you can help and find someone who can be a resource to you around that, then You should grab that and hold onto it and move forward. So those are my tips for how to draft a good contract, even if you don't have an attorney. And if you find yourself in the spot and listening to these that you need maybe a contract just to get you started and wanna have a cost-effective resource to be able to do that, I highly recommend that you check out my contract templates at creativecontracts.co. They are drafted by me, an attorney who's helped hundreds of online business owners just like you. People who have product businesses, who have, are online and e-commerce, people who are content creators in different formats and people who are service providers and agencies. That's my main people that I work with, and I see and help people in those businesses day in, day out. And I have drafted my contracts for a modern online business owner, just like you. And I put in them all of these structural things that will help and prompt you to be able to think through what do you need for your business? And when I get the same problems cropping up in my business, I change those contracts and I update them. And I make sure I put in instructions and video guides to help you walk through, because I don't believe in gotcha terms and contract. I believe in something that can be clear and fair for both sides because that's what makes a really good solid business relationship that people have a good time in and are happy about the outcome. And they want to come back to you again and again and send their friends and family and loved ones their way too. And I know that's what kind of business you want to have and want to show up with. And I want to help you do that and show up as the confident business owner with integrity that you want to. So if you're interested and want more information and want to know what maybe contracts might be a right fit for your business, depending on what you sell and how you sell visit creativecontracts.co. There's a free quiz on there that can help you walk through and will give you a personalized recommendation of what you might need for your business. Make sure that you like and subscribe to this channel if you're interested in more information on how to get your business legally legit. Uh, there it is. And make sure to connect with me, Brittany Ratelle. I am usually hanging out on Instagram. That's where my creatives are, and I wanna be where my people are, just like Ariel, along with having digital resources like this and a podcast if you'd like to learn on the go. Thanks for being here and helping to work and make your contracts and thus your business cleaner and clearer and ready to move forward with confidence. Catch you on the next video where we're going to talk about how to negotiate and redline a contract, even if you get something that you don't think you know how to negotiate. I'm going to teach you step by step my best lawyer tricks for how to make sure you can get that contract in good shape.