Understand if you should sign that contract
Because you should never sign a contract you don’t understand!
Enter your email to download a workbook that will help you decide if signing that contract a good idea. The workbook also outlines my contract review system and gives you a checklist to review your contract.
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Still to this day one of my strongest memories of growing up is thinking of my mom with her Franklin Covey Day Planner (and as I found out while writing this they still exist). This is probably because her “book” went everywhere with us during my childhood. Back before smartphones existed, this book was my mom’s second brain. It had the grocery list, recipes, everyone’s clothing sizes, Dad’s travel schedule, books she wanted to read, and everywhere us kids were supposed to be and when.
My mom was pretty darn organized. So when it comes to organization, I’m not sure if it’s in my nature or I came to it by nurture.
Either way, I’ve grown up to be a pretty organized adult (except when it comes to my closet, that’s always a total disaster). And just like my mom, I love a paper calendar, although my calendar of choice is the Weekly Planner from Little Otsu. And as I’ve grown my businesses, I’ve found that systems are a lifesaver. They have become my favorite organizational tool to not only make me more efficient but to make sure I’m not forgetting a step.
As many of you know, one of my biggest frustrations is when creatives sign contracts they don’t understand. Sometimes this is because they feel pressured to sign the contract now, but other times it is because they don’t know what to do to adequately review and understand a contract.
So today I’m going to take you under the hood and show you the process I use to review a contract.
The system I use to review contracts every day
Pre-reading homework
In my opinion, a good contract review starts with a little homework before you even start reading. Because if you don’t know your must-haves, your can’t-haves, and your goals; then you have no ability to assess if this contract meets those objectives while reading it.
This means you’ll never be able to decide if the contract is or isn’t a good deal for your business.
So I like to start off by taking out a sheet of paper (yes, an actual piece of paper) and listing out any of the must-haves and can’t-haves for this particular contract. For example, in a recent contract review, I did for a client, she told me that she needed at least a $5,000 advance. So an advance of greater than $5,000 goes on the must-have list. Or maybe you are concerned about your copyrights and you won’t sign the contract if you are selling them to the other party, if so, transferring your copyright would go on the can’t-haves list.
Once you have this list put on your daydreaming cap and imagine your ideal outcomes and goals for this project. Is your goal to get a foothold into licensing your art on home goods? Do you need a boost in cash flow? Is your goal to elevate the types of stores you are working with?
Once you have this list put on your daydreaming cap and imagine your ideal outcomes and goals for this project.
Come up with one or two ideal goals or outcomes for this project and add them to your list. I usually put these in big, colorful, bold lettering at the top so they stay at the forefront of my brain while I look over the contract.
Understand if you should sign that contract
Because you should never sign a contract you don’t understand!
Enter your email to download a workbook that will help you decide if signing that contract a good idea. The workbook also outlines my contract review system and gives you a checklist to review your contract.
Your privacy is important to us. Learn how we protect it here.
Diving into the contract
Now that we’ve got a framework to review the contract, it’s time to read through it. Here again, I’m a huge fan of printing the contract out (I usually print it double-sided and two sheets to a page). I like this because then I can make color-coded notes on the contract itself and have all my notes next to the clauses of the contract I’m referring to.
The tools I use while I read through the contract are my pre-reading homework and three pens (red, blue, and green). Anything I’ve got questions about (either contract language that I want to research or things I need to double-check with my client) I make notes about in the margin in green. If I come across any red flags or things that are contrary to my goals or must-haves list; they get noted in red. Finally, the blue pen is used for any other notes.
Once I’ve got a marked-up contract I turn to answering the questions in green. This might involve digging and researching the contract legalese, making sure this deal won’t conflict with another deal or getting answers from my client or the other party about items in the contract. If my research turns any of the green items to red items, I circle them with the red pen.
Next, I look over my notes in blue. Generally, this involves a conversation with my client to make sure that none of these should have been on our can’t-have list or will conflict with our overall goals for the contract. Again, if anything changes then I circle that item red.
Finally, I turn to any red areas. My thinking cap goes back on and I spend time brainstorming ways that I can fix these areas of the contract so they benefit both sides while still meeting our goals and not conflicting with the can’t-haves.
Part of this process is trying to create a balance between things that my client is happy with and things she’s can live with but isn’t thrilled about. My philosophy is that you know you’ve reached the right balance when as a whole neither party is 100% happy or 100% unhappy with the contract.
You want both sides to have parts of the contract they love and parts they will put up with to get the parts they really want.
Once I’ve settled on some solid ideas, I run them past my client and we agree on something that I think will fly with the other side and still meet her requirements.
Understand if you should sign that contract
Because you should never sign a contract you don’t understand!
Enter your email to download a workbook that will help you decide if signing that contract a good idea. The workbook also outlines my contract review system and gives you a checklist to review your contract.
Your privacy is important to us. Learn how we protect it here.
Mucking up the contract
Now that I’ve got ideas and a plan to fix the contract, I turn to editing it. The lawyer lingo for this process is called redlining. What I do (along with most lawyers) is to open the contract in Microsoft Word and turn on the track changes function. This makes it really easy to see where and how I’ve edited the contract. Once it’s all marked up with my changes I send it back to the other party for review.
Sometimes I’ve hit the right balance and the contract is a-ok with the other side, other times we go back and forth a couple of times before either the deal is acceptable to my client or we decide that we never are going to make the deal work.
Do you have a process to review contracts that come in? If so, let us know how you do it and how it’s helped your business. If you don’t, does this make the process seem feasible? I’d love to hear in the comments below.
Understand if you should sign that contract
Because you should never sign a contract you don’t understand!
Enter your email to download a workbook that will help you decide if signing that contract a good idea. The workbook also outlines my contract review system and gives you a checklist to review your contract.
Your privacy is important to us. Learn how we protect it here.