Top 5 Common Contract Mistakes to Avoid

Contracts are an important part of an independent consulting business. They define services to be performed, state payment terms and conditions, and provide legal protection. As a solo business owner, a simple contract mistake can end up costing you valuable time and money. With your business and reputation on the line, it’s important to carefully negotiate a contract that includes critical terms, safeguards against potential problems, and establishes a solid client relationship.  

Here are five common contract mistakes to avoid when writing your contract.

1. Vague Descriptions

Outline the services you will provide as precisely as possible. For example, “independent contractor will perform consulting services for client” leaves far too much open to interpretation and disagreement on the actual scope of the project.  Don’t assume that particulars will be mutually understood—if something isn’t clearly stated in your contract, your client may not be legally accountable for it. Be specific about what services will be provided, what deliverables you are accountable for, and any deadlines or milestones related to the project.

Try it: SOW Template (Scope of Work) for Project Management 

 2. Not Enough Information

It’s important to go into an agreement with as much information as possible.  You may not be able to state a definite cost for services. For example, if you are billing on an hourly basis or will rely on outside vendors for some of the work, it is likely not possible to provide an absolute amount. Still, you can define boundaries such as a cost range or a “not to exceed” cost.  This can also be applied to the time frame if needed.

At a minimum, scope, responsibilities, and payment terms should be clearly defined in the contract. The process for changes in project scope should also be spelled out.

Dig deeper: Do I Need an Independent Contractor Agreement for Consulting? 

 3. Ambiguous or Confusing Language

Just because a contract is a legally binding document doesn’t mean it has to be filled with hard to understand “legalese.” Avoid highly technical industry terms and jargon that your client may not be familiar with.  

Likewise, if your client wishes to include a clause that you’re not familiar with, work with them to simplify the request. A contract’s language should be thorough, but also simple to understand. 

Check out: How to Bid on Consulting Projects and Win 

 4. Using a Generic Template

When drafting your own contracts, referencing a template can be a helpful guide. However, using a template as a substitute for a custom contract can be risky. Templates may omit sections or verbiage that are needed for the specific project or client.  

Templates may also fail to meet the requirements of your state’s contract laws. When using a contract template as a reference guide, be sure to add additional information to customize it to your needs. 

Learn more: How to Write an Independent Contractor Agreement 

 5. Going without an Attorney

Many independent professionals choose to hire an attorney to draft their contracts. This helps to ensure that the contracts are properly written, include all necessary information, and fully protect both parties.  

Should you choose to draft your own contract, or if your client provides a contract, it is highly advisable to have an attorney review the contract and terms before signing. 

Consultants who run their business through MBO Partners receive help reviewing contracts. Don’t hesitate to reach out if you have questions about creating a contract for your next project.