#207 - When Being 'Nice' in Business Contracts Backfires
I talk to business owners quite regularly who think they're doing their clients a favour by keeping their legal contracts short and sweet. However by trying to be "nice", they’re doing more harm than good.
I get it. You want to be approachable, you don't want to overwhelm clients with "legalese” and scare them off with a huge document that looks too formal.
But providing your clients with a short and sweet contract is not setting them, or you, up for success. Today I’m sharing three areas where I see contracts backfire when business owners are just trying to be nice.
Managing Expectations
After 20 years in law and 12 of those in litigation, I've seen firsthand how those friendly, abbreviated contracts can transform into expensive disputes.
When you opt for simplicity over clarity, you're not just cutting words – you're cutting protection. Your contract isn't communicating friendliness; it's signaling a lack of professionalism and structure.
Think about it: without clear terms, how will you handle a client who requests "just one more small change" or a dispute over who owns the final work. What about the client who decides your payment terms are "just suggestions"?
Your client agreement needs to clearly outline:
Exactly what you're delivering (and what you're not)
How additional requests will be handled and billed
Who owns the intellectual property
What happens if either party needs to end the relationship
Intellectual property
I've seen this scenario play out many times with my creative clients: you create brilliant concepts, then the relationship hits a bump - maybe over timeline expectations or an invoice dispute - and suddenly the client decides to take your drawings to another professional to "finish the job."
Without clear language addressing intellectual property ownership in your agreement, you're often left without recourse. The client feels entitled to use your work however they want because those casual discussions weren't documented properly. Your intellectual property is one of your most valuable business assets. Protecting it isn't being difficult - it's being smart.
Contractor Complications
If you're working with contractors, the stakes get even higher. Recent legal changes have transformed the contractor-employee landscape, and generic templates simply won't protect you.
Each contractor relationship needs a tailored agreement that reflects the specific nature of your working relationship. Without this, you're exposing yourself to potential misclassification claims that could cost you dearly.
Reframing "Nice" as "Professional"
Here's the mindset shift you need: detailed contracts aren't unfriendly – they're respectful.
By clearly outlining expectations, deliverables, and boundaries, you're showing that you value both your work and your client's time. You're eliminating the ambiguity that leads to disappointment and disputes.
This isn't about creating cold, intimidating legal documents. Your terms and conditions can absolutely reflect your brand's personality and warmth. In fact, tailored T&Cs give you the perfect opportunity to showcase your unique approach while still providing proper protection. From your choice of language to how you structure your client communications around these agreements, you can maintain your personability while establishing professional boundaries.
Essential Elements Every Agreement Needs
At minimum, your client agreements should address:
Detailed scope of work and deliverables
Clear process for handling changes or additions
Intellectual property ownership and usage rights
Payment terms and consequences for late payment
Termination conditions and process
Remember: a comprehensive agreement isn't a barrier to conversion – it's a demonstration of your professionalism that can actually enhance client confidence.
You can be both kind AND professional. In fact, the kindest thing you can do for your clients (and yourself) is to start with crystal-clear expectations.
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[00:00:20] Tracey: Welcome back to the podcast everyone. Thank you as always for joining me for another episode. In today's episode, I'm going to share with you a conversation that I have repeatedly in my business with new clients when they reach out to have a conversation about working together to tackle their client service agreements.
[00:00:38]if you're a long time listener, you'll know that when I'm talking client service agreements, i'm talking the document you enter into with your clients, and you can call it anything, terms and Conditions, design Agreement, coaching Agreement, business, T's and C's. You can call it whatever you like but I'm referring to the agreement that you have in place with your lovely clients.
[00:00:59] What I hear often is I want a really short set of T's and C's, Tracy. My clients are busy. I don't wanna burden them with complex documents that they have to read. I don't wanna add to their already long list of things to do by putting an agreement in front of them that's long. I wanna be really nice. I wanna be really down to earth.
[00:01:22] I wanna be really approachable and I want a really short, simple set of T's and C's. There are so many red flags in that conversation. There are so many landmines just waiting to go off for business owners that take that approach. I always spend the time explaining this to clients when they're saying these sorts of things to me so that they can understand the fundamental importance of the most important documents they will ever have in their business, which is the agreement or the document they have with their clients.
[00:01:53] In my experience, once a business owner understands and appreciates the [00:02:00] significance of these documents and once they talk to a lawyer like me who does things quite differently and who takes great pride in ensuring that these client service agreements are not the 42 page legal jargon set of contracts that are really old school, boring and dull lawyer has drafted, once they know it doesn't have to be like that, I have not once ever had a client say to me, no thanks. I wanna go to somebody who can do them shorter. I wanna go to someone who can do them with less detail. I wanna go to someone who doesn't care so much about them. I've never had that conversation. So taking the time to educate the business owners that I speak to around the important role, the purpose, what needs to be in. These T's and C's or these client service agreements is something that I just love to do and that's what I'm gonna share with you in this episode.
[00:02:54] I'm going to step you through the same sort of conversation that I have with new clients or business owners when they're reaching out to talk to me about the very simple t's and C's that they want in their business.
[00:03:08] Let me just start by saying there are no prizes for having the shortest client contracts. In fact, whilst the business owner can think, I'm doing my clients a favor by having something really simple to present to them, what you're actually doing Is sending a message to your clients that I don't care so much about these.
[00:03:28] I either I don't know, or I couldn't be bothered to take the time to get these right and tailored for my business, or I'm disorganized, or I'm just lacking in professionalism. Unpopular opinion, might be, but that's the truth and that's the reality. And from somebody who works in this space day in and day out, and I've spent more than 20 years in the law dealing with contracts.
[00:03:50] And as you know, again, if you're a longtime listener, I spent the first 12 years of my career in litigation and dispute resolution and that's all over contracts when things go wrong in [00:04:00] business. So really, there's nothing I haven't seen when it comes to what can go wrong and much of it can be avoided with proper documentation in place.
[00:04:08] That's the truth. So when we're talking about the message you are sending to clients, yes you are sending the wrong message when you're presenting them with your very proud two page T's and C's that have got really small print and you're so happy that you've been able to fit everything into two pages.
[00:04:25] To me, it sort of feels like a Telstra or an Optus when they send you a contract to sign and it's so small and so convoluted, no one can understand it. It's difficult to read. No one bothers and they just sign it. That's the impression that comes to my mind when I'm presented with a set of T's and C's that are less than two pages or thereabouts, either from someone that I'm gonna do business with.
[00:04:47] Hot tip, I don't do business with those types of businesses. I move on, thank you very much. Or when someone's sharing with me the terms that they've cobbled together or somebody else's terms that they've seen that are really short and they'd like something like that.
[00:04:59] So it just sends all the wrong messages.
[00:05:02] When you are trying to be accommodating in business to get a client over the line, there's a few different things that we need to think about and how you run your business is up to you. Your sales process, your offerings, your prices, how you deal with objections, whether you are offering payment plans, whether you've got your FAQ page, whether you've got a sales team that can answer objections, whether you can offer money back guarantees if you're a service provider, whether you have a short termination period, or whatever it might be, those are all really valid considerations when you are trying to get a client over the line or convert a prospect to a paying client.
[00:05:40] Every business is different and we all deal with objections in different ways, depending on the data, depending on what we know our client pain points to be. However, having really short, friendly, and lovely and nice ts and Cs in place as a tool to [00:06:00] try and convert somebody is a hard no from me.
[00:06:04] You are sending the wrong message. You are not setting the parties up for success, either you or the client, and you're leaving your business exposed. So it's a hard no for me for so many reasons. That is not the place to take shortcuts. That is not the place to try and be nice because that's the word that I hear a lot.
[00:06:22] I just wanna be nice. I don't wanna deal with that. There's three areas that I see business owners really come unstuck with their contracts when it comes to, I just wanna be nice, I want something really short and friendly and I'll share those three with you. The first is managing client expectations.
[00:06:41] You just can't do it when you're taking shortcuts on your client service agreements because there's no room. There's no room to set out in those client service agreements, or Ts and cs, how to manage expectations. What are you delivering? What are you not delivering? What is expected of the client? What can they expect from you?
[00:07:00] Those are really fundamental components that need to go into the T's and C's that then dives into the deliverables, so you can set out some detail, either issue the T's and C's in conjunction with a tailored proposal or set out the deliverables in your service agreement so people know how many Zoom sessions, am I getting access to you in between Zoom sessions?
[00:07:20] Do I get recordings? What type of access do I get to your content? That type of thing goes into the deliverables so that clients are really clear, this is what I'm getting from my money. That then, when we take shortcuts, leaves businesses exposed because they haven't managed the expectations, they haven't taken time and space and care to deal with deliverables and what the client can expect.
[00:07:45] What that surely then means is that there's no framework around dealing with variations or scope creep in relation to the services being offered and I see this so often with my creative clients who said, I just want something really short. I don't wanna put too much. I just wanna [00:08:00] keep working until my client's happy, Tracy and if they're not happy, then I will refund them or I'll just keep doing revisions until they are happy. That's a really new business owner. A business owner who's a few years in or a little more says to me, oh my Lord, I had no boundaries. I had no way to say no to the 15th round of revisions, and I had no way to charge for them and this is the scope creep component. This is where business owners who are trying to be nice really come unstuck because of scope creep, and they have no legal right to issue an invoice for the additional work they've done beyond scope or they haven't managed the client's expectations well, so that ifthe client does receive an invoice, the client becomes really disgruntled because they weren't expecting it, because their expectations haven't been managed because they've had a really short form set of T's and C's that doesn't set out the detail. And you know what comes next. Payment.
[00:08:59] Business owners have difficulty getting paid and when they do get paid, it's either in an unsavory situation where they've had to negotiate with a client for a reduced sum and the client's not happy and the business owner's not happy, and they have not finished the project in a really positive and meaningful way or they've had to go down the path of debt recovery, which is not pleasant for anybody. So when business owners are wanting to issue really short Ts and Cs in terms of service or client service agreements, the first place they leave themselves exposed is the not managing expectations, not having the space or time to set out in detail the deliverables, not having the right to deal with variations and ending up having scope creep.
[00:09:44] And then they've got issues around being paid. So there's a few there, but they come under the same umbrella because they all start with the expectations. The second area that I see these business owners who wanna be really nice and have really short, friendly, lovely Ts and Cs, I see them exposed [00:10:00] when it comes to dealing with their intellectual property.
[00:10:02] Now this is something I've seen predominantly with my creative clients in the space of interior design or building design, and what I've seen happen too many times is because of the lack of detail, lack of professionalism, lack of care in the T's and C's, or the client service agreement.
[00:10:20] For whatever reason, things don't go according to plan, and the client at some point decides they're going to go and work with another professional. So another building designer or another interior designer, and I'm gonna take your drawings and your concepts and your plans and I'm going to give them to somebody else and they can finish it, either because you've taken too long, this is not what I thought, don't wanna pay this invoice for scope creep. You didn't tell me I'd need to pay that. Relationships or communication has broken down, whatever it might be, you can start to see why this is a dovetail from the first issues that I discussed around the managing the expectations, but for whatever reason, the client gets to a point where they wanna move on and work with someone else.
[00:11:02] And because the client service agreement hasn't taken the time to deal with ownership of intellectual property, what the client can and can't do with it, what the reproduction of the drawings or concepts mean whether there's additional fees, whether they can't do it, whether there's moral rights, because that is not dealt with in the client service agreement, ,the business owner is left exposed with often not a leg to stand on because the client's free to do what they want with it because of discussions that have been had which haven't been reflected in the agreement or because what's in the agreement hasn't adequately protected the business owner in circumstances like that.
[00:11:41] So this is something that I've seen more frequently lately for some reason to be honest. I'm not sure what's happening but more and more people are reaching out to ask questions about IP because they're in a situation like that. So that's the second area that being nice can backfire big time. And the [00:12:00] third is not the client service agreements, but it's when dealing with contractors.
[00:12:04] So the law in relation to employees and contractors has changed a lot over the last 12 to 18 months, and there's no suggestion those changes are gonna stop anytime soon. First and foremost, care needs to be taken in developing the documentation that a business enters into with their contractors. If the contractor has a service agreement to issue to the business, the business owner needs to take the time to read it and understand it and make sure it reflects the arrangement.
[00:12:33] If the business is the one issuing a contractor agreement to a contractor, then the business owner again needs to make sure they're taking the time to have that contractor agreement tailored for their business and for the role that they're engaging a contractor for. There is just too many circumstances that I'm advising clients on where they're coming to me and they're saying, oh, I'm now in a situation where a contractor has left. They're no longer a contractor. But now they're saying things to me like either I was really an employee. This was a sham contract, and you have to pay me my unpaid entitlements, including super often, or I own that ip.
[00:13:10] I did that work with you, but I own that IP because guess what? IP wasn't dealt with in the contractor agreement properly to reflect the needs of the business or the intention of the business, or sometimes the contractor really was straddling that line between employee and contractor and usually when this crosses my desk, the contractor's become disgruntled for whatever reason.
[00:13:32] They've sought advice or they've spoken to their friend at the cafe or the pub, and the friend has said, Hey, I read this Fair Work article, it says this, and because the contractor's disgruntled, they think, yes, absolutely. I'm going after that business for my last two years worth of super and unpaid leave entitlements.
[00:13:49] That's a claim that no business wants to get ever. So the reason the business owner ends up in that situation is because they say to me, but the contract is so lovely. We've got a preexisting [00:14:00] relationship. I've known them for so long, I don't ever have to worry about something like that. I've got this template.
[00:14:05] I grabbed it from such and such. It's fine. It does the job. I don't need something too long. I don't wanna do that. And besides Tracy, we've got such a great relationship, I'm quite sure nothing will ever go wrong. I'm, I'm quite sure this person would never do that. And it is always those scenarios, whether it's in six months, 12 months, four years, doesn't matter.
[00:14:25] It's always those ones that the business owner experiences. Huh. That's actually not what I expected from the contractor. The contractor has done what I was advised they could do. They've done what I never thought they'd do, and now the business is in this situation where it has to respond to or defend themselves against a claim like that.
[00:14:47] So those are the three times that I see most commonly business owners who are trying to be nice with their contracts have their contracts backfire, have their loveliness backfire, have their beautiful intentions backfire on them because they're not adequately protected with the documents that they have.
[00:15:08] The way I'd like to talk to clients about this is I'd like to flip this. I'd like to flip this and say, hang on. You can still be lovely and nice because that's who you are. You are lovely and nice, and you can be self-respecting and professional and take the time to have your client service agreements or your contract agreements or whatever contracts we're talking about.
[00:15:29] Take the time to have them tailored properly for your business so that you are respecting yourself and your business, and you are respecting the other party. The client or the contractor. By doing this, you are setting both yourself and the other party up for success. You are setting yourself up to not only meet expectations, but to exceed them.
[00:15:48] And when we're talking about wanting to convert prospects to paying clients, my hand on heart view is that if a business has properly tailored client service agreement in place that's [00:16:00] on brand, that doesn't look like a boring old school lawyer has drafted it to demonstrate how smart they are, that doesn't look like that, that looks and sounds like the business owner then that my friend is a fundamental component of helping convert prospects to paying clients, because what we want to achieve is for the client to read your beautiful scope of work or to read your proposal and to read your terms and conditions or your client service agreement, to reach the end, whether they're reading it in detail or skimming it and thinking, I am busting to work with this business. I can't wait. That's what should happen. Absolutely hands down, that's what should happen and it can and it does. So I'd like to flip on the head the concept of, oh by issuing a client service agreement that's more than two pages is a bad thing.
[00:16:48] It's got long clauses and all the things, no, no, no. We flip it around and we say, actually, it's a great thing. I'm demonstrating my professionalism. The clients know that I invest in myself, that I respect my business so that means of course I'm going to respect their business. If I can produce. Seamless contracts and onboarding processes like this within my own business, then that client can have absolute confidence that the work I do for them is going to be just as stellar and just as professional.
[00:17:17] That's what we want to create. That's what your documents should be creating, and the same applies when you're dealing with contractors. The same messaging, the same approach, the same level of respect, the same applies. What we want to do in these documents is make sure that you are not compromising on integrity and quality in the documents so that you do have clauses in your documents to set out expectations, to manage those expectations every single time so that it's crystal clear in your documents what you'll be doing, what you won't be doing, what's expected of your client, and what your clients can expect of you.
[00:17:53] What the scope of work is, how you're going to deal with variations, how you're going to deal with issuing [00:18:00] invoices for revisions, for example, that have been carried out, that fall outside of scope, what your payment terms are, and giving you a right to cease services if payment hasn't been made.
[00:18:11] It's really easy then to rely on this agreement to navigate those potentially tricky situations to resolve issues, nip it in the bud before it comes a big thing so that you can continue with the client, move on, work on the project, deliver beautiful services without fracturing the relationship, and that's what your properly tailored legals will do.
[00:18:30] This is where being nice by saying, oh, but I don't want all that and I don't wanna do that, and I don't wanna do that. You're sending the wrong message. And the lack of detail, the lack of protection, backfires.
[00:18:42] I hope this has been helpful for you in sharing some insight into conversations that I have so often in my business, and to share some insight into you about the way I reframe the concern or worry or fear or Negativity attached to the beautiful legal contracts that ought to be designed to support a business, not something that's been put into place as a bandaid or a stopgap or a ticker box, which ultimately leaves the business exposed.
[00:19:12] Hope you've enjoyed it. As always in this season of the podcast, I'm ending each episode by answering two questions that come across my desk of late. The first one relates to what we've been talking about today, so that's great and the question is, Can IP be tailored in contractor agreements?
[00:19:29] Yes, it can. Absolutely. There is no stock standard must have in relation to IP ownership. It is something that needs to be tailored and it needs to reflect the agreement or the arrangement that you have with your contractors. So when you're engaging a contractor to provide services, who owns the intellectual property that they are creating in the provision of those services?
[00:19:52] Now, depending on the type of work that the contractor is doing, and depending on the type of IP that's being created, depends on the answer. So it [00:20:00] depends on whether the business owns it or whether the contractor owns it or whether it's shared and whether you can both use it and if so, to what extent?
[00:20:08] It's always nice in circumstances where a contractor is bringing in preexisting IP to reference that so that there can be no confusion that the contractor, of course, retains ownership of their own preexisting ip. And indeed the business retains ownership of their preexisting ip. So yes, IP certainly is something that can be tailored in contractor agreements.
[00:20:28] And the second question is if I engage a contractor, do they need their own insurance? It's a very simple yes. Having their own insurance is one of the many hallmarks of differentiation between a contractor and an employee. An employee does not have to have their own insurance. A contractor should absolutely should.
[00:20:47] And as a business owner, you need to make sure that you're clear on what those Hallmark differentiations are and what the courts and the law looks at when determining whether a Contractor is actually a genuine contractor or whether really they're deemed to be an employee. So yes, they need their own insurance.
[00:21:04] As always. Thank you so much for listening. If you have a moment, it would mean the world to me if you would dive over to Apple Podcasts and leave a review. Together, that's how we get the podcast into the ears of even more business owners to share value as far and wide as we can.
[00:21:18] Thank you so much. I catch you next time.
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