Contracts give you, the provider of services, protection with clients who may be unsatisfied or refuse to pay. They also defines the boundaries of the relationship and manages expectations. In other words, it prevents bickering.
Many rules come into play with contracts, including statutory laws and court rulings. And all of those words and clauses tend to run together when small business owners in the fitness industry start to read through them. This is one main reason an attorney is helpful when it comes to understanding contract law and how it affects you.
How to create a contract
You have several options when it comes to contract creations. Ideally, contracts are written and checked by an attorney. We also recommend low-cost templates like the ones we have at Fit Legally.
But, the first rule of thumb is to READ the contract. All of it. Then take the template and tailor it to your specific needs and then run it by a local attorney to make sure you are covered—every time.
Working with Clients
Clients are wonderful and yet challenging. They’re the lifeblood of your business, and they fit into one of two categories.
- The Ideal Client
This is what everyone wants, the client that is easy to work with and for. The one that pays on time, doesn’t complain, and refers people your way.
- The Problem Client
The problem client is why you have contracts. They’ll never be happy and want to haggle over everything. It’s best if you don’t take them on, but they are hard to identify.
When you have a problem client, they take up a lot of your time. A well-written contract can save you some time that you’ll spend on these problem contracts.
A Good Contract is a Great Tool
When a client signs your contract, it gives you both peace of mind, as you both know what to expect from the other person. It also becomes easier to enforce the terms as it puts the full force of the law behind the terms.
With this leverage, you can prevent some headaches and heartburn. Even if you never go into a courtroom, the threat of litigation is often enough to make your client bend to the contract’s terms.
The Details of Contracts
So, contracts are important; we’ve got that down. But what’s in a contract that makes it important? Good question! Let’s break this down.
A contract is NOT just a list of rules. It’s not a document that says what each side must do or a document containing a promise.
A valid contract is an agreement between at least two parties to create a legally binding agreement. It’s a promise to do, or not to do, certain things that are legally enforceable. It contains an offer, acceptance, and consideration.
Offer: An offer occurs when one party expressly promises to be bound by the contract terms. The offer can be made to a specific person or the whole world.
Acceptance: The accepting party can then accept an offer when they answer the offer with a statement or act that unequivocally communicates to the offer or acceptance of his offer. It is important to remember two things with acceptance: (1) Silence or non-responsiveness from the offeree does not equal acceptance; and (2) acceptance of an offer based upon additional terms and conditions is, in fact, a counteroffer, not a valid acceptance of an offer. (See why you want a lawyer, that was a lot of words.)
Consideration: Consideration is the most important part of any contract. Consideration is the bargain for exchange. It’s the exchange of services for monetary compensation. The law requires a bargaining process referred to as “dickering.”
Terms & Conditions of Contracts
Now that you have the basics down let’s talk about the terms and conditions.
Terms: A term includes the bargained-for consideration. It is a basic requirement of a contract, e.g., payment upon completion of services.
Conditions: A condition is a circumstance or scenario that, if it occurs, makes the terms of the contract effective or ineffective. An example of this would be when a client has only partially paid on their account, and you have completed the services rendered in full. Since the client did not fulfill their contractual duty, you are not contractually obligated to provide the rest of the service to them.
How to Build the Best Possible Contract
First of all, you don’t need to weigh down your contract with words and legalese. You need to make sure it makes sense and includes all of the necessary information. The best contracts are short and written in plain language. They are simple and effective.
Talk about the expectations with your potential client. Tailor your template to each specific situation if needed. Think about potential problems and develop some options for solutions before you need them, but don’t include all of them in your contract. Short and sweet is the name of the game.