The Best Way To Legally Protect Your Online Business

18 Aug, 2021 By Bobby Klinck
The Best Way To Legally Protect Your Online Business

When you’re in business, you naturally form relationships and agreements with clients, service providers, independent contractors, and many others. But you also need to get in the practice of getting all your agreements in writing. 

This might not seem like a big deal, but it can save you a lot of pain in the future. You don’t want to have business relationships turn sour because an unwritten agreement left too much space for different interpretations or disputes about what was agreed upon. 

Getting agreements in writing is something a lot of people in business (myself included) often skip over in the beginning. But it’s actually an easy way to protect your business and your relationships and avoid disputes.

If you already know you need to learn more about the legal stuff for your online business but don’t have the budget for a lawyer yet, I’ve got the perfect solution for you: my FREE training called Online Legal Foundations. This course is part of my completely FREE program, BADA$$ Online Marketing University (BOMU). Stop buying more courses and enroll in BOMU where you can get the training and support you need to build and market your online business.

A Mantra to Keep Your Business Covered

When it comes to protecting your business, there’s one rule you need to remember: If it’s not in writing, it didn’t happen. Let me repeat that just in case you missed it: If it’s not in writing, it didn’t happen.

The reason you need to adopt this mantra is to get you in the right mindset, which is that you should have a written agreement to cover every single relationship and agreement that’s important to your business. If it would hurt you if the relationship were destroyed or if the other side didn’t fulfill their part of the agreement, then it needs to be in writing. It’s just that simple.

The Benefits of Having a Written Agreement

You might be wondering if I’m just overly excited about written agreements because I’m a lawyer. Nope! There are 3 big benefits to having written agreements.

1. It’s going to make sure that you’re actually in agreement

Believe it or not, many times people actually aren’t in agreement. They may have discussed a project at a high level but didn’t discuss details. For instance, they may agree that one is going to provide marketing services for the other at a certain price, but they have different views about what marketing services are included.

The act of putting your agreement in writing is going to force you to work out those details because you’re going to want to put in the specifics. It’s going to make sure that you’re actually in agreement and on the same page with the other person who is a party to the agreement.

2. It helps avoid disputes

Humans actually don’t have great memories. That’s a fact. We think we do, but we don’t. And we always tend to be the hero in our stories.

What that means is that if you don’t have a written agreement and what you have is just a “handshake deal” with a client, over time, what’s going to happen is your memory of what you agreed to do for the client is going to skew towards less and less, and the client’s memory of what you agreed to do for them is going to skew toward more and more.

Eventually, there’s going to be an issue and they’re going to believe that you agreed to do X, Y, and Z. And you’re going to say, “No, I never agreed to that. That wasn’t part of the deal.” There’s no way to go back and figure it all out because neither of you put your agreement in writing.

3. It will help resolve disputes

Let’s say that six months into a client relationship, a dispute comes up about whether you agreed to do X, Y, and Z or not. When you don’t have an agreement in writing, you and your client will have to rely upon your memory. The problem is your memories are different. You’re going to have a dispute and there’s no simple way to resolve it.

In most cases, you’re not going to end up going to court because it’s not going to be worthwhile for either side, but what’s going to happen is one side or the other is going to cave in.

The party who caves in is going to feel like they were wronged in the deal and it’s likely going to destroy the relationship.

So if it’s your client, you’re going to stop doing business with them, or they’re not going to give you rave reviews because they’re not happy with you anymore. Can you see all of these negative consequences?

On the other hand, if you had a written agreement and the same dispute came up, there’s an easy way to resolve it. All you have to do is look at the written agreement where you and the client set out very specifically what you agreed to do.

Ultimately, written agreements help protect your business. For example, if you don’t have an agreement and you end up in a lawsuit, it’s going to be more expensive because it’s your word against the other party’s word. There’s no way to resolve that quickly and the lawsuit may just keep going for a long time. If you have a written agreement, you can often resolve it quickly.

Common Clauses to Add in Agreements

There are three sets of clauses that need to be in written agreements to avoid confusion and protect your business. These clauses are:

1.   Entire Agreement and Amendments

The Entire Agreement clause will have words to the effect that the written agreement is the entire agreement between the parties and it supersedes any prior oral, written, or other agreements between the parties.

Simply put, it’s saying that the agreement is the whole thing, and there’s nothing beyond the four corners of this document.

Then, the Amendments clause will say that the agreement can be altered, or amended, only by an amendment in writing, signed by both parties.

In combination, the Entire Agreement clause and the Amendments clause in a written agreement help resolve any disputes because in the event one comes up, the only thing that either party can really look at to set an obligation is what is written in the agreement. If it’s not written in there, it’s not an obligation.

2.   Waiver

The Waiver clause will say something to the effect that the only way a party to the agreement can waive, or give up, any rights under the agreement is by doing so in writing. In addition, the failure to exercise a right or enforce something under this agreement in one instance will not prevent a party from enforcing it in the future.

The Waiver clause gives a business owner the ability to give leeway to someone else. You might want to be lenient with someone who may not be living up to a part of your agreement because you don’t want to just throw the agreement out. At the same time, a waiver clause ensures that you can give someone leeway without giving up your rights in the future.

Let’s say you have an agreement with a client that says they must pay you on the first of the month or else you stop work. Your client calls you on the first of the month, saying, “Hey, I’m going to be late this month. I’m going to pay on the third.” And you say, “Okay, that’s fine. I’ll keep working. I’m not going to stop because of that.”

You could do that the first time, but when it happens again next month, you don’t want them saying, “Well, last month you said it was okay. So, you can’t quit on me now.” With a waiver clause in your agreement, you can say, “No, no. Last month I gave you grace, but this month I’m going to insist you pay me or I’m going to stop work.”

A waiver clause gives you some flexibility and allows things to work out with the other party. Now, as a legal matter, you probably don’t give up rights anyway by not enforcing them the first time. But you want it clear, and you want it in writing, and you don’t want a dispute about it. So that’s why you want a waiver clause in your agreement.

3.   Dispute Resolution

This clause specifies how a dispute between parties to an agreement will be resolved. There are two options.

One option is to go to court. Here, the person with more power is usually the one who can say where a lawsuit can be filed. Say, if you’re the one who gets to decide and you’re in California, they must come to California to sue you. They can’t sue you in their home state if they’re somewhere else.

The other option is arbitration. This is where you hire a third party, the arbitrator, to decide any disputes that come up. Now, there are pros and cons to using this option. The advantages are that you’ll generally resolve disputes more quickly and more easily, and you’ll also pay less because you’re not hiring lawyers. On the other hand, the services of a judge are free, but you’d have to pay for a lawyer if you must go to court.

Honestly, most times, you’re not going to end up in a dispute where you have to either go to court or arbitration, but you want to set the rules generally in a way that favors you, and that’s why an arbitration clause is helpful.

For example, when you have an online class, having an arbitration clause in your course agreement can have value because, in case of a dispute, you can say to a student who raises an issue, “Not only do you have to arbitrate, not only do you have to come where I am, but also, you can’t join with other students and come after me. You have to do it individually.”  

Written Agreements You Need for Your Business

Every single agreement that’s important to your business needs to be in writing. Every relationship that’s important in your business needs to be in writing. It’s just that simple. So think of it this way: 100% of your agreements need to be in writing.

Your first step here is to have a list of your business relationships. For example, if you’re a service provider, you will have clients. If you’re a seller, you’ll have customers. If you have an online course, then you will probably have students. You’ll have to create a relationship list, and you’ll need to have written agreements for all of that.

Here are some standard agreements that online entrepreneurs will generally need.

1.   Client Agreement

If you work one-on-one with clients as a service provider, you need to have a client agreement. That agreement among other things is going to set out specifically what services you’re going to provide, what they’re going to pay you, when they’re going to pay you, and so on.

2.   Service Agreement

If you’re the person who’s hiring someone, you want to make sure they have a service agreement that’s specific about the service that they will provide to you. You need to layout specifically what you’re going to do. Often, you’ll do it in a statement of work that’s attached at the back of an agreement. You may also specifically say what will not be done.

I’ve talked to web designers, for example, who tell me all the time that some of their clients mistakenly believe that a web designer will write the copy. And they say, “No, we don’t write the copy. You’ve got to give us the copy or we’ve got to bring in a copywriter.” If you see this happening a lot in your situation, where your customers expect you to do a certain thing that you don’t include, then you have to write it in so that there won’t be an issue later.  

3.   Online Program Agreement

You could think of an online program agreement as online course terms and conditions. It’s basically the agreement between you as a course creator or someone who has an online program and your participants or members. It basically functions in the same way as a client agreement, but it’s in this different context and you’re generally not going to have them physically sign it. Instead, you’re going to have a checkbox somewhere on your website where they agree to it, which is a web page that sets out the rules.

It’s going to lay out things like what they can and can’t do with the content and what they’re going to get. It will define things like “lifetime access,” refund policy, cancellation policy, etc. Procedures on payments, refunds, and cancellations should also be included here.

4.   Non-Disclosure Agreement

You’ll also need to have agreements that protect your confidential information. There are two kinds. There’s a one-way Non-Disclosure Agreement (NDA) for sharing your confidential information with someone else. This puts an obligation on them not to share your information with others, but they’re not going to share any of their confidential information with you.

If you want the obligation to go both ways, where you might want some of the other party’s confidential information (e.g., maybe you want to do a joint venture with them), you need a two-way NDA or a two-way confidentiality agreement so that the obligations go both ways.

5.   Independent Contractor Agreement

You will need this if you’re going to work with independent contractors like a designer, a copywriter, or a virtual assistant. This covers things like transferring intellectual property to you for what they create while working for you.

It should also have confidentiality provisions so that they can’t use the secrets that they learn from your business to compete with you later.

6.   Testimonial and General Publicity Releases

Before you use anyone’s name, image, or likeness in your marketing for any commercial purpose, you need to get their permission. You need to have a policy to get these written agreements in place.

7.   Other Agreements

If you have an affiliate program, you need to have an Affiliate Agreement. You might need a Speaker Agreement if you’re a speaker, or if you’re bringing people in to speak. If you have someone supplying some part of something you’re making, you need to have a Supplier Agreement. If you have a distributor, you need to have a Distributor Agreement.

Get Things in Writing

The big takeaway is to get all your agreements in writing. That’s going to be the single biggest step you can take to get your legal protection in place. If you’re looking for a place to get legal agreements, check out my legal template shop.

If you’d like to learn more about legal matters concerning business, I have a FREE course called Online Legal Foundations inside BADA$$ Online Marketing University (BOMU), where you can get an overview of these things. You’ll walk out knowing what you need to do to get your legal protection in place. Sign up today.

Leave a Reply

Your email address will not be published. Required fields are marked *

Bobby Klinck

Harvard Lawyer and Online Entrepreneur