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This business coaching episode is about the ins and outs of legal agreements.

Results-Focused Training, Tools, and Workshops from Expert Business Coaches.

Featured Coaching Excerpt - Notes & Transcript, Part 1
  • Lesson Nugget: Most goods are sold with an implied warranty provided by law which implies that the product will not do damage to you.
  • Lesson Nugget: As a business owner, you want to have contracts for almost everything. This way you can easily protect your business from customers that could cause a lot of harm.
  • Lesson Nugget: Don't allow the desire to protect your business through contracts overshadow the importance of giving your customer a quality product and experience.
  • Lesson Nugget: When dealing with customers, always have a contract for anything more than a low amount cash transaction.
  • Action Steps: Have your attorney create a specific agreement for your business that you can use for all of your business's transactions.

netflix for legal, time management

-What's going on guys, my name is Daniel McKenna. I'm the executive producer here at Thrive15, the website that provides training for business owners in time management, marketing, sales, and more. Today we have Clay Clark speaking with Wes Carter. We're actually answering a Thriver question, and the question is, legal agreements-- do my clients need to sign them? Specifically, we're talking about when should I have my client sign agreements? When is it a big deal? When does it not matter? This is a huge deal. This could save you a ton of money down the road. You're going to want to watch and pay attention.

At Thrive15 we believe that knowledge without application is meaningless. Unless you actually take the time to learn something, specifically apply it to your life or your business, watching these videos is more meaningless than an Urban Spoon review of a soup kitchen.

-Thrive15.com and Wes Carter are providing general legal information to provide Thrivers like you with the basic framework of the terms, concepts, and scenarios found within the legal system of the United States. If you are a human who is watching this video, you should seek the legal advice of a local attorney before making a legal decision. If you watching these videos from any country outside of the United States or from any planets outside of the planet Earth, you need to seek the wise legal counsel of a local attorney who better understands the legal complexities found within your country, planet, state, or city.

For instance, some states including California, Florida, Nevada, Alaska, and Hawaii, a motorist can be cited for driving too slow. Other states do not have this law. Although Clay has actually been pulled over for driving too slow within the state of Oklahoma, this pretty much never happens. Wes Carter is a great American and a beautiful man. Thrive15 and its partners are in no way legally liable for any fashion statements that he makes verbally or just by emitting fashionable awesomeness simply by entering into a room. Wes Carter is not related in any shape or form to Clarence Carter, recording artist, John Carter, entrepreneur and artist, or Joe Carter, MLB baseball player.

-Wes Carter, how are you my friend?

-I'm doing great, how are you doing?

-I am doing well, and I wanted to read an email that I sent myself this morning.

-Awesome.

-Dear Clay, on today's episode make sure to ask Wes Carter one legal question that the Thrivers want to know.

-OK.

-Is Wes Carter related in any way shape or form to former president of United States, Jimmy Carter?

-No.

-OK. Now we're going to talk about the big elephant in the room that-- well, I mean I think that was the elephant in the room that Thrivers wanted to know.

-Or the donkey in the room.

-The donkey in the room. All right, but now we want to talk about agreements, and do clients really need to sign them?

-OK.

-So Wes, when I go to Target, I don't have to sign a legal agreement.

-No.

-Why?

-Well, you are purchasing something for cash, and the law has a few very limited implied warranties that if I sell you something I'm going to implicitly guarantee that it's not going to blow up or harm you.

-So Target doesn't require a legal agreement, but when I buy a--

-Unless you use your credit card at Target.

-Oh really. What do you mean by that?

-If you buy with cash, which not many of us do today then you give them cash. They give you your shirt. You walk out the door. If you use a credit card, there's all kinds of contracts that come into play because you have a contract with your credit card company. The credit card company has a contract with Target. There's probably a credit card processor in the middle.

-Gosh.

-So if we're talking cash, it may be simple, anything beyond cash, bitcoin, you know.

-Now when I built my house, you know, I had to have a contract, an agreement. Why? What can't I just pay a credit card and not have an agreement?

-Well, it's to protect you, and to protect the other party.

-So at what point do you go from Target to the house? I mean, is it like at $60,000 we need an agreement? $10,000? $2,000? I mean, at what point do I need to start-- if I'm a business owner, at what point do I need to start having contracts for everybody I do business with?

-As a business owner, from a commercial not personal, you should have contracts for just about everything.

-Why?

-If it's above $10 then-- well, because, what happens if we get into a fight? So maybe it's only $100 a month, but I have a contract for five years. Or it's $100 a month, but you do something stupid and really cause me a ton of money in a loss. You know, you do something that shuts down my business for four months, and I lose hundreds of thousands of dollars. Then we would need to be able to address that and not have it up just no agreement, we'll sue each other and fight it out for years.

-OK. But when I cut hair-- one of my businesses, we cut hair.

-Yes.

-Do I need to have a contract every I cut someone's hair?

-Yes.

-Really? Why?

-Well, because you're going to talk about liability release, you know. You're not going to sue me if you hate my haircut.

-So you'd recommend we do an agreement, even for haircutting?

-Yeah.

-Really? So do think most businesses are running kind of roughshod and operating without contracts and they should have them?

-I think the more you can agree to upfront-- you and I as the customer and the business can agree, he's the rules we're going to play by. Now's there's a line. You have a line, a fine line you walk between protecting yourself, agreeing to things upfront to overdoing it and harming your business. So it's a fine line you walk. You know, if you're going to have a person who comes in to cut their hair once a month, every month, you know, you have a membership program, something like that. Definitely have a contract for that.

-OK.

-You're going to be doing a monthly charge, anything like that. If you're the barbershop on the corner, I walk in, I give you $20 to cut my hair, we're probably going to feel a little-- the customer's going to feel weird having to sign.

-So just to get some clarity, what kind of business definitely need a contract every time, and which kind of businesses do not?

-I think any time you're selling something to another corporation, a commercial transaction, always you need a contract.

-Business to business--

-Business to business, you need a contract.

-OK, what about business to consumer?

-Business to consumer depends on the type of service. Anything more than a cash transaction for a very low amount, you need a contract.

-OK. That makes sense. That's big. And I think that a lot of people watching this-- we were kind of going, OK, that's great. I need to get an agreement. But what are the action steps that I need to take if I want to create a legal contract that I can use when working with my clients? Should I go to Office Depot, just get a template? Boom, I'm done. Or what should I do.

-No, you need to have an attorney tailor if for you. Because once you get a good one, you're probably not going to have to change if for awhile. So have your attorney help you with a good form for your agreement, whatever it is. They'll tailor it to your specific business. You can put your branding on it. You can use it as a place to market, but you need that language in there. If you're selling lawn mowers, you're cutting hair, I mean those are going to be a little different, depending on what you're

doing.

Watch and find more online trainings with time management

Featured Coaching Excerpt - Notes & Transcript, Part 2
  • Lesson Nugget: If you don't have a contract, a customer can make up anything you said and their word could be used against you.
  • Lesson Nugget: Courts will usually favor the side of the consumer, which is why it is important to have contracts to protect your business.
  • Lesson Nugget: A contract may cost $500+ depending on how in depth it need to be. This will save you from unclear legal issues.

[MUSIC PLAYING]

-So let's say that I'm a crazy guy and I say, I don't want to do a contract.

-OK.

-I just want to be rough shod, I'm rogue. I'm just going, bam. I'm just selling stuff. And let's say that I am selling RV's. What's the worst that could happen to me, worst thing that could happen to me as a business owner if I'm out there selling RV's, no contract?

-Well, I'm going to come in, your customer. Your salesman on the floor or the lawn, wherever you sell RV's, and I'm going to say, look, your salesman promised me this thing would run for 25 years without any maintenance. They said I would get 50 miles to the gallon, and they said I could come back here and service it for free for life.

-Quick time out.

[WHISTLE BLOWS]

-Yes.

-I would never sell RV's on the lawn. I would always sell RV's in a big dome.

[DRAMATIC MUSIC PLAYING]

CLAY CLARK: I would call it the RV Dome. It would be like Metrodome where the Twins used to play or the Superdome where the Saints would play.

-Yes.

-And I would sell RV's there. That's a fact.

-Like RV's in an Epcot Center.

-Yeah, the Epcot of RV's. So you're saying the sales guy is telling me all these-- he's telling you as a consumer--

-Well, I can say that. We had nothing in writing. So me as the customer, I can say whatever I want, allege whatever I want, and it's your salespeople's word against my word.

-And salespeople never lie.

-Never. Or try to go a little extra, just to get the sell.

-So let's say that now we're in court, courtski.

-Yes.

-You said, hey, you committed fraud. You told me it had 50 miles a gallon on this RV that I bought from your Superdome of our RV, your Epcot Center of RV's.

WES CARTER: Right.

CLAY CLARK: And it did not do that. You told me it would do that, but it did not do that. Does the court usually rule in favor of the consumer or the business owner?

-They're always going to err on the side of the consumer.

-Come on.

-To protect the naive public, I think is the theory behind it. But yeah, and you have all these consumer protection laws where you could be whole sets a laws on if you sell something fraudulently, it could be a crime. It could be penalties, it could be all kind of stuff.

CLAY CLARK: That's ridiculous.

-State level, federal level. So that's why it's important to have things in writing.

CLAY CLARK: Well, I think the moral of the story here is, one, you definitely don't want to open up an RV park in the middle of a dome, because that sets you up for legal issues. And then two, if you do sell RV's, you better have a contract.

-You want a contract.

-Are you always shocked when you run into business owners that do not have contracts? Are you like, what are you doing?

-I do, you know? Or they're doing huge value deals as far as $100,000, $50,000 or bet-the-business kinds of deals. And so then they get in a fight, they come see me, because something's got screwed up. Well, let me see the agreement. And it's either one piece of paper with a paragraph and a signature that they made themselves or they said, well, we just did it on a handshake.

-So how much would it cost me if I'm convinced, I'm like, OK, I'm going to hire an attorney to make a contract. How much does it cost?

-You know, how long the contract is, I'd say $500 going up. I mean, if we're talking about a 500-page contract, obviously that's more money than a simple release.

-What about a transaction deal, like if I'm going to sell mattresses and I want to get a contract for my mattress sales?

-I'd say $500. A couple hours of your attorney's time.

-It's $500 to $1,000 maybe, a couple hours of your attorney's time.

-Right.

-OK. Now Wes, I appreciate you coming here and bringing some clarity to the contracts, and if we need them, and if we don't need them.

WES CARTER: Right,

-And I really don't want to leave this episode where we had a chance to talk about the RV Dome and contracts and all that without telling you, I look forward to suing you.

-I can't wait.

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