#125 3 things that can happen when you don't have Ts & Cs
I often say that when it comes to protecting yourself in business, prevention is better than cure. As a lawyer who works with small businesses and a small business owner myself, I've always emphasised the importance of having rock solid terms and conditions to protect your business. So today, I'm sharing with you the 3 things that can happen when you don't have Ts & Cs in place.
If your business doesn’t have a robust legal framework, you may not be able to establish a legally binding contract. Without terms and conditions, good luck trying to enforce your rights or obligations when disputes arise!
This also flows on to create misaligned expectations which can easily lead to friction and dissatisfied clients. Without a clear outline of what is included in your services, when they will be delivered, and how processes work, misunderstandings are bound to happen at some point. I talk about how this lack of clarity can undermine the relationship with your clients and the integrity of the service you provide.
The third risk I discuss involves refund requests and the potential difficulty of getting paid. Without clear Ts & Cs and the misaligned expectations that come with that, your clients might not be satisfied and therefore ask for a refund. They may even refuse to pay for your services, feeling that what you provided didn't meet their expectations. In these situations, without crystal clear Ts & Cs, you won’t have a leg to stand on.
Rock solid terms and conditions that are uniquely tailored to your business are absolutely critical for long term success. They help in clearly defining the expectations and obligations of both parties, helping to avoid common issues such as unenforceable contracts, misaligned expectations, and payment disputes.
If you're unsure about your current terms and conditions, I encourage you to reach out. My mission is to empower you and set you up for success by making sure you're legally protected before any disputes arise.
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[00:00:00] Tracey: Hello everyone. Welcome back to another episode of the Rise Up in Business Podcast. Thank you so much for joining me. Again. I wanna just pause here before I dive in and just take a moment to share with you my gratitude for every single one of you that dives in and listens to this podcast week after week because I am receiving fabulous feedback.
[00:00:44] From listeners of the podcast, but I'm also receiving more and more new clients reaching out to me who have been longtime listeners of the podcast, and they're ready to reach out and work together, and they ask me to. Give them some advice or some guidance, or they'd like a strategy session, or can we work together to develop their documents?
[00:01:02] And all of these things mean to me that we are achieving our mission, which is to get this podcast into the ears of even more business owners to add value and to really enrich lives. So thank you. Can I ask if you are a longtime listener or if you've only listened to a few episodes.
[00:01:20] But if you like the podcast, if you love the podcast, if you get value out of the podcast, could I please ask that you take a moment to leave a review on Apple Podcasts, because that is what helps us get the podcast into even more ears of business owners. So thank you. Diving in to today's episode. So if you are a longtime listener, you will have heard me say A lot prevention's better than cure in business.
[00:01:48] And I talk so much about the value of your business legals and your terms and conditions, your business terms and conditions, your client service agreement, and I've spent so much time talking about why these are important and why you should have them. I think they're fabulous. You know that I love solid, tailored legal documents.
[00:02:10] I think that they can make or break a business's success. They can set you apart from your competitors. In last week's episode on the podcast, I talked about how stellar legal documents can help you convert prospects to clients. So from the heart, I think that they can do so much and they can bring so much value to your business.
[00:02:32] What I'm gonna talk about today though is the flip side and I'm gonna share with you three things that can happen when you don't have your terms and conditions in place. The three most common things that I see so often when business owners don't have them. So this is just to flip the script a little bit and give you some perspective from the other side.
[00:02:55] So it's all well and good for me to share with you from my own experience as a lawyer and as a business owner, and as someone who acts for so many business owners. So I can tell you all day long, all the fabulous things about them, why you need them, and I can go into that and I can talk for hours and hours and hours.
[00:03:15] But I'm gonna talk to you about what happens if you don't have them. And when I'm talking about terms and conditions in this episode, I'm talking about your client service terms. If you're a service-based business, I'm talking about your proper click wrap terms on the website. If you're selling things on your website, I'm talking about your purchase terms, if you're a product-based business,
[00:03:35] so the terms and conditions apply to whatever it is you're doing in your business. So number one, if you don't have your terms and conditions in place, the first and most risky thing that can happen is that you may not be able to establish a legally binding contract.
[00:03:53] You may not be able to establish that there were legal obligations flowing both ways. You simply may not have an agreement that sticks. So what do I mean by this? As a small business owner selling products or services, you have obligations under the Australian consumer law to tell your clients certain things about your terms before they decide to engage with you.
[00:04:17] Now, if you do that, whatever it is you've outlined in your terms, Provided they comply with the consumer law and their fair will be binding. So let's take an interior designer, for example. If you're an interior designer and you wanna work with a client and you give them your proposal, you need to outline for them what your terms are.
[00:04:34] Upfront right there. And then what are you delivering? What do you expect to be paid? How are your fees calculated? What's your cancellation policy? What's your policy in relation to custom purchases? If you do them, what's your rescheduling policy? What is excluded? Are you gonna hang artwork? Are you gonna hang mirrors?
[00:04:53] Are you gonna clear rubbish? Are you gonna clean? Those types of things need to be set out in your terms. If you are a web designer and you are creating a beautiful brand and a beautiful website for somebody, what is it that you're providing? What is it that you're not providing?
[00:05:07] What is your process? What do you expect from your clients? What files are you going to provide? What are you going to include? What is additional that the client needs to be paid and when do you need to be paid? Those are some examples of the terms that need to be set out for your clients before they decide to engage you.
[00:05:25] Now, let's say you don't have any, or let's say on your quote or your proposal that you send out, you've just got a little one-liner at the bottom saying something like, and I've seen this a lot, deposit's non-refundable, no refunds payment in seven days or something like that. You might have a little more, but let's get the gist.
[00:05:44] And you get partway through your project and your client says to you, oh, but I thought you were going to do this, or I thought I'd be getting this, or I thought that was included, or I thought you'd be finished by now, or I thought this would be ready for my launch date of that. You see where I'm going?
[00:06:00] because you don't have proper terms in place, you are struggling now to establish a framework of what your obligations are to your client. You're struggling to establish the framework. You don't have a valid contract at contract law.
[00:06:15] There's certain things that need to be in place for a contract to be valid. Yes, there can be oral contracts, but honestly that's a rabbit hole. We are not going to go down today. But you're struggling to establish the framework and what it is you were contracted to provide and what it is your client's obligations are to you.
[00:06:32] I bet you you're starting to get a sense of how messy and tricky this can be to navigate. This leads into point number two. Which is the misaligned expectations with your clients if you don't have proper terms, despite how good your proposal or your quote might be, but if you don't have proper terms in place that are tailored to suit your business and to suit how you operate, chances are that you're gonna end up at some point with misaligned expectations with your client.
[00:07:02] Along the lines of what I just explained. So what are they getting and when, and what's included and what's not, and when will you be providing them with drafts or when will you be doing an installation? And what's the process if they change their mind? And how many rounds of revisions do they really get and can they change the scope partway through, but they don't like it anymore?
[00:07:20] You can see where this is going and, and people's brains start to fry about now when you're in business and you realise that you are a soul led business and you wanna do your absolute best work for your clients and you really care, but you don't have proper terms. In place, which means you've just set yourself up for failure with your client.
[00:07:41] At some point. It's not sustainable, and it's most certainly not setting you up for long-term success because how can you be expected to be building long-term sustainable relationships with your clients if they're dissatisfied at some point, if not overall, but just at some point, and that just compromises and undermines the integrity of the service that you're providing.
[00:08:01] There was a lack of clarity about when they'd be getting it and what was expected and when it would be ready. We wanna avoid all of that and you can, but those are the first two things that happen most often when people don't have their terms in place. You may not be establishing a valid contract.
[00:08:17] Chances are you're not, therefore, you can't enforce it. And secondly, you encountering misaligned expectations with your clients and no one in business wants that. And the third point, which you can probably guess, is refund requests and difficulty getting paid. So if you've got a situation on your hands where you don't have terms, which means there's no rules and no guidelines around what you're doing for your client and what your client's expected to do and so forth, chances are.
[00:08:46] If they're not happy, they're gonna ask you for a refund. They want to go somewhere else. If their expectations weren't met, they're going to assert potentially that you didn't meet your obligations under the consumer law, and they should be entitled to a refund. Spoiler alert here, they may well be. I've encountered lots of situations where business owners reach out to me to help them deal with a really dissatisfied client, and a lot of the time, my advice is unpleasant as it as it is to have to give it.
[00:09:13] Is you need to provide this refund. You don't have a leg to stand on case by case basis. Of course, we look at these things individually, but it happens a lot if there are no terms in place, and then the trouble being paid. So if you don't even go down the path of a refund request, they may not pay the rest.
[00:09:31] And the, depending on how you've structured your payment processes, that can be a significant sum. If a client gets to the end and says, I'm just so unhappy with this, or This has just missed the mark, I'm not prepared to pay for it. And that happens. And again, if you reach out to someone like me to get help, chances are you may not have a leg to stand on because you didn't have proper terms in place from the outset.
[00:09:53] So those are the three most common things that I see happen, and it leaves business owners exposed and vulnerable because as a business, as a small business owner, it's hard enough wearing all the hats and doing all the things. I just don't see that you need to be exposing yourself to this level of risk.
[00:10:09] And this level of potential stress and grief and financial cash crunch by not having terms in place. So there you have it. the three things I see occur most commonly when businesses don't have their terms in place are that they don't have a contract that's enforceable.
[00:10:26] They experience misaligned expectations with their clients leading to unhappy clients, and they receive refund requests or they have difficulty getting paid. I hope that's been helpful in offering a different perspective on the podcast around why your legals are so important in business.
[00:10:44] If you have questions, if you're not sure if what you have in place does what it's meant to do, if you're just not sure if they're cutting it, if you're just not sure if they're right, please reach out and let's have a chat. That's what I'm here for. My ethos in my business is an empower ethos, and I want to empower business owners to move forward with absolute confidence that they are protected and that they have a stellar structure and that their risk mitigation is sound. So if you're not sure, reach out. Let's chat. I'd love to hear from you. Thanks so much for listening. I'll catch you next time.
LINKS:
Previous episode mentioned: Online Offerings + Masterclasses - why you need to have your Ts & Cs tailored
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