Very excited to have Brittany Ratelle take over today's challenge. She is a fellow Dubsado user and attorney for creative entrepreneurs.
We'll get right to it, she is diving into the good stuff. Contracts!
If you are having trouble with insomnia, here’s a hot tip -- its CONTRACT time.*
Look, we all know legal is about as fun as buying tires, but with so much business disruption from COVID-19, it’s a good time to look at our contracts and see where your legal obligations are at and form a plan of how you WANT to respond today, tomorrow, or weeks from now as we all begin to rebuild and move forward.
7 HANDY CONTRACT TIPS FOR COVID-19👇
2. If you sell services -- you need to protect that revenue stream and clarify that client relationship. If you don’t have a contract, don’t beat yourself up too much about it now-- but know that when you know better, do better. :-) If you’re trying to work out service changes, look for a proposal, Scope of Work/Statement of Work, purchase order, or some sort of writing/email chain that explains what the obligations were and what was supposed to happen if circumstances changed.
3. For COVID-19 disruptions, read through your contracts and look for language about: Cancellation, Rescheduling, Termination, Or Force Majeure/Act of God/inclement weather/natural disasters/travel issues, etc.
- If you have some specific language of what needs to happen and when, follow that (example: How many days notice do you have to give before canceling? (many say 30 days out you can cancel and only lose the deposit)
- Are you supposed to find a replacement if you can’t do it?
- Do you offer refunds of deposits or retainers and if so, under what circumstances?)
- If you don’t have any specific language about it, then the default common law in your state would apply and as lawyers love to say -- “it depends!!!”
4. Consider if you really are in “Force Majeure Land” = think of it as a kooky new video-game level (or the Upside-Down) that most of us assume we’d never actually see, but that some of us have now ended up here (with no sign of a Demogorgon...yet). You can usually only get to Force Majeure Land if it is IMPOSSIBLE for you or your client to perform what was agreed in the contract. Whether it is truly impossible for you to perform may depend on where you live, what has been declared/ordered by your local, state or national government, and when. Note that impossible to fulfill is very different than, it’s hard/more expensive/scarier/riskier or more time-consuming, etc. This ticket to Force Majeure Land only comes if you reasonably could not have foreseen these triggering events when you signed the contract. (which means that if you try and sign a contract tomorrow, you won’t be able to say this since even your great-grandma has been laughing at Coronavirus memes by now).
Example: If you were hired to do a balloon arch for SXSW -- you literally CANNOT perform your obligations since the event was canceled. It doesn’t exist. But, if you are supposed to fly to LA and do a brand shoot and your flight got canceled -- can you book another one? Can you rent a car? Can you get a substitute photographer? Most Force Majeure clauses say that the parties are supposed to take REASONABLE action to try and fix their problems, to make things better, to come up with creative solutions (or to “mitigate” the circumstances).
5. So, if you really are in Force Majeure Land (and oddly the music is speeding up like the last lap of Mariokart….) What now? Some things to consider:
- Just because legally you can keep all or part of the payment, doesn’t mean it's the ethical/good PR/business goodwill thing to do. There is usually a legal line fence, and then some hedges on either side of it that are the “industry practice/ethics” and you should keep in mind what feels authentic to you, your reputation, and your business practices. We all have to keep the lights on -- but we are all humans too and recognize that some of these disruptions have been devastating to some individuals. Stand up for your small business, but also try to be a decent human being.
- If you have already done some work for a project, then usually you can keep that money for your time, efforts, and expenses, even if the project hasn’t been completed.
- Be clear and consistent. Yes, you have the magic wand as the business owner -- but clients will likely not take kindly if some get refunds and some don’t (remember your niche can be a very small world!)
6. What if you want to cancel as the service provider? You can. But keep in mind that you are likely supposed to take reasonable nice-human steps to fix the situation (get a backup provider, issue a credit on their account, try to reschedule).
7. Document. Document. DOCUMENT your communication with your client (use your Dubsado portal to keep things organized and clear!) Make it clear that you have done everything you could to be a reasonable business owner in light of the circumstances. Document when things were shut-down/quarantined/shelter-in-place, canceled that affected your business and what you did about it.
Brittany Ratelle is an attorney for creative entrepreneurs who believes in solid contracts and cute office supplies. As a busy mama of four, she shares tips and tricks for getting modern business legit on IG, on her Podcast Creative Counsel and sells downloadable legal templates at creativecontracts.co. She has a free legal checklist on how to get your creative business legally legit HERE.
*While I’m a licensed attorney, I’m not YOUR attorney, so please remember this information is general and that if you have questions about how it applies to your specific business and facts, please consult with an attorney.*