Get It In Writing!

10/11/2010

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Get It In Writing! Protecting Your Future with Written Contracts

Sales transactions are about building and maintaining relationships between a business and its customer, and like with any relationship, communication is the key to success. Without good communication misunderstandings happen, expectations are miscalculated and problems occur. A vital tool to assist you in ensuring your sales transactions are successful (whether you are a business or its customer) is a written contract.

Too often written contracts are ignored or forgotten in sales transactions because they are considered tedious. Businesses and consumers making both small and large scale transactions often use the excuse that written documentation is unnecessary because “the sale is so small” or “or the project is too big” for the details to be put effectively in writing.

No matter what the size of the sales transaction a written contract helps to avoid misunderstanding. At BBB we regularly witness complaints over both small (i.e. a piece of clothing) and large (i.e. the construction of a new home) sales transactions, many which could have been avoided and more easily solved with the existence of a written contact.

Written contracts don’t have to be complicated documents filled with legalese. They can be as simple as a sales receipt or an invoice, or even just a Word document. When a written contract exists, sales transactions are much less likely to turn sour and end up as formal BBB complaints, or even worse — in court. Written contracts provide both businesses and consumers a framework from which to work to resolve issues.

What should be in a written contract?
At a minimum BBB suggests the following items be contained in a written contract:
  • Name and contact information for both the business and the consumer;
  • Date of contract or sales transaction;
  • Detailed product or service specifications (i.e. type, size, color, model number, number of hours of labour etc.);
  • Breakdown of itemized costs including taxes;
  • Payment or delivery schedule and methods;
  • Cancelation, refund or exchange policies;
  • Businesses HST number if applicable;
  • Signatures from both parties.
Of course, written contracts are only effective if the parties involved understand what has been included. Businesses need to take the time to clearly explain the details of the contract to their clients. Likewise, consumers need to carefully review and understand the terms of a contract before they sign it.
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