Note: The links for Chris Guillebeau’s books are affiliate links.
I admire people like Chris Guillebeau who run with ideas and make stuff happen. He’s written a number of books, including The $100 Startup: Reinvent the Way You Make a Living, Do What You Love, and Create a New Future. The most recent book of his that I wrote was Side Hustle: From Idea to Income in 27 Days where he walks you through, day-by-day what you should do to launch a side hustle business. It’s a good book, but Chris and I disagree about how to approach contracts.
Day 14: Contract
Chris calls Day 14 “Set Up a Way to Get Paid.” This chapter covers selecting a payment system, creating invoices, and using simple contracts. For your contract, he says you only need to specify what you’ll do, how much you’ll get paid, when you’ll get paid, and “any protections you require.” Chris also says that that you can communicate all of this via email without needing a separate agreement document.
While Chris is technically right, I would never advise a client to operate their business this way. This is the type of contract that works when nothing goes wrong; however, contracts exist to save you in two situations:
- When there’s confusion about the parties’ obligations, and
- When there’s a problem or dispute.
Always Have a Separate Written Contract
If there is situation where lawyers are needed to resolve a dispute, the first thing I ask my client is “Where’s your contract?” If it’s a series of emails, and perhaps some text messages, and phone calls or conversations you claim occurred, the first part of my job will be compiling the terms of the agreement.
When there’s a single agreement, all the terms are in one place. And when the contract requires that all changes must be in writing and signed by both parties, it minimizes the risk of confusion or a he-said-she-said situation.
When you don’t have the terms of the contract in a single document, it opens the door for complications in the future. In many cases, it’s more cost-effective to have a lawyer create a contract template for your side hustle than to have to hire one to piece together the terms from the parties’ communications and actions.
Minimum Contract Terms
In general, I don’t advise people to write their own contracts (unless they have a law degree or sufficient contract experience), but here are the basic terms I’d expect to find a side hustle contract:
- Parties to the contract
- Purpose of the contract
- Payment terms, including what happens if the customer doesn’t pay (e.g. entrepreneurs who require ½ the fee up front and ½ upon completion)
- Intellectual property terms – related to creation, assignment, and/or license
- Where and how problems will be resolved, including the venue, jurisdiction, and which state law will govern
- If/how the parties can make changes to the contract
- “Entire agreement” – all the terms in the contract are in the agreement
- “Severability” – if the contract has any invalid terms then the parties will throw those out and the rest of the contract will remain
- A provision that states if a party chooses not to use a right granted by the contract, they don’t waive their right to use it in the future
When I approach a new contract for a client, I try to mentally walk through the customer’s journey and address the problems that the client is trying to avoid and pre-plan how you want to deal with problems when they occur.
Using a Lawyer for your Side Hustle
If you’re going to have a side hustle, I recommend you sit down with a lawyer for an hour. Tell them your goals and your budget. An understanding lawyer will tell you about the legal issues you need to be aware of, can do a quick trademark search to see if the name(s) you want to use are already registered, and they can tell you want you can do yourself and what tasks you should hire a lawyer to do for you.
A Few Final Thoughts
Thinking about what missteps I’ve seen companies inadvertently commit, here are a few extra tidbits of information:
- The terms of service for a website, online course, or mobile app are contracts. Write them or have them created with care.
- Please don’t rip of another company’s terms of service and just change out the company and product names. That’s a recipe for trouble. You don’t want to represent that you do things that you don’t. I’ve also seen situations where the company’s terms of service says that it’s governed by New Jersey law and the company has no connection to that state. (The company they stole the terms from was in New Jersey.)
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