You’ve been asked to sign a contract … now what?
Benjamin Franklin famously said, “The only things certain in life are death and taxes.” However, there’s one thing just as certain that Franklin may have missed: contracts. If you’re buying a car, signing up for a new cell phone plan, hiring a contractor, or even sending your child to a private school, you’re sure to encounter them. But fear not, unlike death and taxes, contracts can be a good thing.
The purpose of any legal contract is to protect both parties involved by clearly outlining and defining the terms of an agreement. A good contract will address the extent of the obligation of both the seller and the buyer. It will cover the exact specifications of the goods and services, the delivery method and timeline, and the price to be paid. If a contract is worth its salt, it will give you confidence the company will do what it promises. However, there are some tricks to navigating contracts.
Get some quality “alone time” with your contract: Since the two of you have just met, you need to get to know each other. Make sure you don’t feel pressured to sign a contract on the spot. For the most part, a reputable seller will be comfortable with your need to take some time to review the contract.
Scope out the scope: The scope of a contract is usually written as “terms and conditions.” It’s what’s covered, and more importantly, what’s not covered by the contract. Take time to consider the best-case scenario and the worst-case scenario outlined in the contract. If you can live with the latter, you’re in good shape. If not, you might consider having an attorney look over the contract for you. If that sounds worse than living with the worst-case scenario, reconsider the reason you’re signing the contract in the first place.
Don’t believe anything you hear … unless you see it in writing: Insist that all verbal promises are included in the contract. Trying to prove what someone said after the fact is extremely difficult. A contract can only cover what’s included, not what’s implied.
Contracts are written on paper, not in stone: If there’s something in the contract that really bothers you and may be a deal-breaker, consider having it rewritten. Small changes can usually be scratched out and initialed with both parties’ consent. Bigger changes may require drafting a new copy.
Get a copy of anything you sign: Was the balance due upon completion or by 30 days? Was the installation to be performed by a subcontractor or the contractor? Keeping a copy of the contract allows you to look back on the agreement and check the details. It’s also the only proof you have that you have an agreement.
Leave the “wide open spaces” for Wyoming: In a contract, everything should be completed before you sign. Leave nothing out and leave nothing to the imagination.
Don’t be confused by the “Three-Day Cooling-Off Rule”: The Three-Day Cooling-Off Rule is commonly misunderstood as a way out of a bad deal. However, there are specific exceptions to this rule, including sales made at the sellers’ usual place of business, sales made totally by phone or mail, sales for emergency home repairs, and other conditions where it won’t apply. If you’re not sure, check with the Better Business Bureau.
Before you invest, investigate: Most importantly, remember that a contract, once signed, is a legally binding document. Before you sign anything, make sure you understand not only the contract but the company that’s written it. With more than 30 million businesses in North America, it can be tricky finding businesses you can trust. As a nonprofit, member-supported organization, our job at the Better Business Bureau is to help you do your homework. Check out BBB.org for objective information about companies.
Kimberly Hazen is the regional director of the Wisconsin Better Business Bureau.