People agree on things all the time. Usually, these agreements are casual in nature and don’t need to be put in writing. When a freelancer or contractor is involved, though, it may be time to put pen to paper, so to speak. In cases where a significant risk is involved or you simply want to protect yourself and your client, an agreement letter is recommended.
If you’re thinking this is just one more thing to add to the challenges of freelancing, you’re wrong. Even if you’re unfamiliar with writing an agreement letter, there’s no need to worry. The concept is really quite simple. It’s easy to learn how to write an agreement letter and to discover when these types of documents are necessary.
Learning how to write an agreement letter between two parties starts with identifying a situation where an agreement letter is necessary, or can be helpful. Knowing when to use an agreement letter is an important project management tool and can save you from negative repercussions down the line.
Generally speaking, an agreement letter is necessary if you’ve agreed to work with a client, but the conditions of the arrangement have not been put into a legal or binding contract. These are familiar scenarios for freelancers and independent contractors who are not affiliated with an official company and who are not entering into employment contracts.
Some freelancers think that learning how to write an agreement is a waste of time. For instance, you may have heard that verbal agreements are sufficient—this is a common misconception. While there are cases where a verbal agreement is enforceable, they are the exception rather than the rule. Unfortunately, the days when business agreements were sealed with a simple handshake are long gone. Today, verbal agreements can be complicated—even impossible—to enforce. Why? Because there’s nothing stopping the client from changing their minds after the fact and misrepresenting their initial agreement.
Of course, that’s the worst-case scenario. There are also situations where people simply forget the original terms of the agreement. We are all human, after all! These situations are common, particularly when a significant amount of time has passed between the initial agreement and the end of the business engagement. A written agreement letter can ensure that the terms and conditions you agree on are indisputable by either party. When the specifics of the agreement are documented in black and white, there’s almost a zero chance of a dispute over these terms later on. This is why it’s imperative that freelancers discover how to write an agreement letter between two parties.
Many freelancers and consultants make the mistake of trying to figure out how to write an agreement before the agreement is made verbally. This can be a waste of time and energy because the client may find the agreement letter unacceptable. In this case, you’ll be back to the drawing board and have to start the process all over again. That’s why it’s pertinent that you come to a meeting of the minds before you draft any sort of formal document, including an agreement letter.
To come to a proper agreement, you’ll need to think through the project from beginning to end. It may be a good idea to jot your ideas down as you go. Write down any thoughts and questions you have about project specifications, retainer agreements, deadlines, and payment, for instance. You may also want to consider aspects of the project such as the number of revisions you’re willing to do and any milestones you want to set for project completion.
If you need a digital workspace for brainstorming or documenting project plans, do yourself a favor and sign up for Bonsai. This versatile project management tool for freelancers can help you organize everything in one place, so it’s not so overwhelming or tedious.
Once you’ve collected your thoughts on the project terms, the next step is to communicate these thoughts to your client. This is also the time to ask any questions you might have and get feedback from the client on your proposed terms. Keep in mind that it may take some time to negotiate the terms so that they are agreeable to both parties. Even so, it’s important to be patient with the process and ensure you reach an agreement that both you and your client are completely comfortable with. This will prevent any potential confusion or delays when it comes time to write the formal agreement letter.
Believe it or not, drafting the actual letter may be the easiest part of the entire process of learning how to write an agreement. Once you know whether such a letter is necessary and the terms have been agreed upon, the only thing left to do is to properly document the conditions of the agreement. If you’ve successfully completed the other two steps above, this part should be a breeze!
You’ll want to start the drafting process by writing a brief preface to the agreement letter. This section of the document will specify the parties entering into the agreement (i.e., you and your client), the purpose of the agreement, and the date that the agreement terms go into effect. Simple enough, right?
Next, you’ll want to write the agreement letter itself. The most important thing to remember here is that the agreement letter must include each and every term and condition that you and your client have previously agreed to verbally. Don’t leave anything out! It doesn’t matter how long the letter ends up being. Take the time and the space that you need to spell everything out. This may be the most critical thing to keep in mind when learning how to write an agreement.
For instance, if you have agreed to send regular invoices throughout the duration of the project, be sure to note this in the agreement letter. Also, specify when the client has agreed to pay these invoices, whether it be within a week or a month of receiving the invoice, for example. These types of conditions are extremely important to document because they can help you resolve any disputes or problems you encounter with your client in the future. Instead of bickering back and forth over payment terms or confidentiality agreements, for instance, you can just politely refer to the paragraph in the agreement letter that specifies what the client has already agreed to and signed off on!
While you can certainly re-create the wheel if you want when drafting your agreement letter, there are also many agreement templates you can choose from. These can save you time while simultaneously ensuring that you have all of the important components to make the letter official. Using a template is also a good idea if you’re still a bit unsure of how to write an agreement properly.
Another important thing to remember when figuring out how to write an agreement letter between two parties is to get a signature. In fact, the letter will need at least two signatures—yours and your client’s. In some cases, you may prefer to have a witness sign the agreement letter as well. While not absolutely necessary, this could add an extra layer of protection to the contract. When requesting a signature from your client, be sure to have him or her date it as well. This proves that the agreement letter was signed before the project started and adds legitimacy to the document as well. Bonsai has a free online signature maker that allows you to sign your documents electronically.
Learning how to effectively write an agreement letter is just one of the many tools you can have in your back pocket to make your life as a freelancer easier and more enjoyable. In particular, it can help you stave off conflict and make your work more enjoyable. As historian and philosopher Arnold J. Toynbee once said, “the supreme accomplishment is to blur the line between work and play.” Want more tips and tools to achieve this ultimate goal? Try Bonsai for free today!
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?