As a small business owner or entrepreneur, it can be tempting to enter into business agreements without entering into a written contract. As every novice attorney learns, a well-written contract clearly sets out the agreed terms so everyone knows what to do and when.

There are all sorts of reasons why we don’t make contracts in writing; annoyance factor, time, money, apathy. I recently met someone who insisted that in a new paradigm, people don’t even need contracts, because ‘we all operate from the heart’!

An unwritten contract has several weaknesses, including someone saying words without a tune:

“I never said that.”

While you may remember the date, the exact place, and most of the rest of the conversation, the other person simply doesn’t, and maybe that’s what they’re saying about you, too.

Most of the time, forgetfulness is genuine, part of being human. Who is always foolproof with a mental shopping list for a bag full of groceries? Last time I forgot the frozen broccoli. It seems significant that it was on someone else’s list. I haven’t been in the cold hallway in years; so the chances of him remembering it were low.

A written contract is a panacea for forgetting.

In many ways, a contract is a glorified list of who does what and when, allowing the relationship to flow smoothly.

With this in mind, you can write your own contract in 4 basic steps:

1. Fill in your name and address and the name and address of the other party,

2. List what they are going to do,

3. Make a list of what you are going to do and

4, add the date and sign.

The dangers of an unwritten contract

You see, in the UK and many other jurisdictions, contracts don’t have to be in writing. If there is nothing in writing, there can be and often still is a contract, an unwritten contract!

The dangers of an unwritten contract are that you really trust both parties to have wonderful memories and to be impeccable with their word.

If someone just forgets, they are more likely to be helpful. When someone has sinister or fearful intentions, this can lead to subterfuge. For example, people regret their promises or have an unrelenting desire to achieve their own goals, either of which can lead to wickedness and lies. Reworking of William Congreve’s “Heaven has no anger like love turned to hate, nor hell a fury like a woman scorned”:

Hell has no more fury than an ego entrenched in being right.

For example, as a friendly gesture, I recently let the person who said contracts were old-fashioned use some of my drawings in an e-book. Credit to me as an artist clung to the end of a slew of marketing messages. The author of the e-book insisted that he had done what I asked and should have said so sooner anyway. The project had been too small and informal for a signed contract; and TRUST had been involved!

How a written record can save the day

The importance of receiving proper credit for my artwork meant that I had communicated the exact wording in an email to be sent to the layout designer, and there were further written communications about the placement, so I was able to resolve the issue and have my drawings removed, without too much extra fuss.

The difference between a signed contract and a written record is that emails and notes can be evidence of the terms that were agreed to for an unwritten contract. Very closely related as you can see.

Some records are better than others; compare an exchange of emails with notes that are said to have occurred during the meeting. What if the notes were made on a branded notepad with the logo of the serviced offices where the meeting was held, and what if they were made on an iPad? All useful, to varying degrees. These days, saved text message threads can also come in handy. The best case scenario is that the written record is in one place, showing some sort of acknowledgment from the other side.

The lesson here is that a written contract is best, and an imperfect list-based contract may be good enough. My mantra for a simpler business relationship is “Put it in writing.” Record the key terms, what really matters, in an email exchange at the very least.

Memories fade, naturally and selectively. To leave a legacy, to make our contribution to the world, we must take care of our business as a being in its own right and not throw our gifts into the world at the hands of chance or whim.