Contracts Over Covenants

I can't believe a piece of nonsense I heard this week.

I had a zoom meeting with a potential new client on Thursday.

And in our lively and interesting discussion (guess what we talked about? client contracts) he told me about how there is some yahoo in the industry running around out there selling $40,000 and $50,000 services from stage with a side of b.s. about covenants over contracts.

While not putting contracts in place that cover these 50k services or his clients.

Ummmmm. NO.

Just NO.

I don't have all the details. And I don't need them.

I can guess that there is some thought process or at least speech behind it about how this shows that he is putting his trust or belief into the relationship, how the relationship based on covenants comes before the individuals (using a religious context), or how contracts are only used when you don't trust the other person (like fences), or as a weapon if things go wrong, or how the relationship depends on people being honest and truthful and doing what they say they are going to do (so covenants suffice), or, or, or.

That's all well and fine.

But anybody selling 40 or 50k in services while not providing their client a legally enforceable contract in exchange, detailing in great detail, exactly what their commitments are to that client in exchange for their investment doesn't get past go in my book.

Covenant, used as a verb, is to pledge. To promise. To stipulate. As a noun, a covenant is an agreement to do something or not to do something specific. As in restrictive covenants.

If you are willing to covenant, why aren't you willing to contract?

• Afraid of the legal enforcement aspect?
• Afraid of actually being held to your commitment?
• or Afraid of actually making a commitment in the first place?

I have known some of these types. Don't give them money.

A contract, on the other hand, is an agreement between private parties creating mutual obligations enforceable by law. Contracts are promises that the law will enforce. Contracts outline mutual obligations for mutual benefit.

Contracts are about mutuality, or reciprocal understanding - in fact this is an essential ingredient in the creation of a legally enforceable contract.

If you have a scenario or engagement where money or value or services are trading hands and the other person doesn't want a contract in place: don't do it.

Why would you want to be in business with someone who doesn't fully commit, and in a way that protect your interests as well?

Are you in? Contract.

Are you willing to be held accountable, legally, in a court of law? Contract.

Are you serious about your commitment? Contract.

Are you committed to fairness and clarity? Contract.

Are you committed to the business relationship? Contract.

Are you committed to remaining in fair exchange? Contract.

Even if the other party is persuasive about their reasons why they don't need or don't use contracts or are above them or can't be bothered by them... Don't do it.

I know how these scenarios end up. Especially when larger amounts of money are trading hands. (Have you ever had to chase down the benefit of a 50k bargain in court without a contract?)

People who care about their businesses AND their clients use contracts.

• Because they are willing to be held to their commitments, including legally.
• Because well-drafted contracts protect the relationship.*
• Because contracts provide clarity.*
• Because contracts outline exactly what the parties need to understand in order to work effectively together.*
• Because contracts minimize problems and disputes.*
• Because they protect both parties.*

(* when done right.)

Now don't get me wrong. Unethical, unprincipled, and unscrupulous people can also use contracts, and they can use them in unethical, unprincipled, and unscrupulous ways.

In my experience, unethical people usually hire unethical lawyers who draft one-sided, unethical contracts.

Don't work with those people.

Read what you are signing every time. Trust your judgment. Get a second opinion. Ask around. Take your time with these decisions.

But make darn sure that if you are giving someone $40,000 or $50,000, (or even $4,000 or $5,000), they are taking care of the relationship by providing you with their detailed commitment to you by way of a legally binding contract, stating exactly how they are going to take care of you and deliver what you have both agreed to.

And if you are providing services through your business, at any level, use contracts. To protect the relationship. To provide clarity to the parties. To minimize problems and disputes. To document your commitment to remain in fair exchange. Taking care of your business means taking care of your clients.

Leave the covenants to God.

Use contracts in your business.

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