# How to make contracts with others

To stay [safe](legal-safety.md), losely consider *your* responsibilities in any explicit or implicit contract.

- Never take a gift if you have *any* questions about the other person's trustworthiness.
  - Receiving a gift from someone earns them an unspoken favor, which is [exposure](safety-riskmgmt.md) to an unknown obligation.
  - Stay *especially* careful of gifts given outside the normal flow of gift-giving behavior.
- Be careful even providing *information*, since it may represent an implicit contract.
  - Often, most [marketing](marketing.md) gimmicks (e.g., free car sweepstakes) are designed to get information they can use for future contact.
- Since anything can exist as a contract, many scams are also viable contracts.
- Many contract provisions may be a perfectly legal violation of [civil rights](people-boundaries.md):
  - Punitive non-compete agreements
  - No-criticism agreements
  - Usage of personal [intellectual property](legal-ip.md)

Only make promises you can fulfill.

- If they want more promises, plainly state what you'll do and promise you'll do your best.
- *Never* promise you'll do something when you're unsure, and make *constant* disclaimers that your performance is likely but not guaranteed.
- You *can* use terms that imply intent but don't state it:
  - e.g., "I can definitely do that." (later, after not doing it) "I didn't say I would."
  - It's [unethical](morality.md) and will get you in court more frequently, but you'll probably win the case unless the judge doesn't like you.
- When estimating the consequences (e.g., as a consultant), bluntly give the worst-case possibility alongside the worst-case *likely* possibility (to prepare them for the worst).
  - The safest way to consult is to *never* be more optimistic than what's likely to happen.

Watch the timing of what you say.

- Only speak freely when you know with *absolute* certainty that nobody is recording you.
- If you know someone tends to take screenshots of conversations, send them audio recordings instead.
- Interacting with the wrong person in the wrong context can lead to a civil case.

When you get a middle party, pay *very* close attention to what you are gaining from their existence.

- Many people find ways to get in the middle of things where they're not necessary.
- In the case of many long-term arrangements, they'll treat you very well on the first engagement, then ignore your needs on subsequent interactions.

## Consenting

Before consenting to *anything*, research beforehand about the reasonable cost and standards for goods and services.

- If you're not careful, consenting to a contract may force you to:
  - Pay more than you expected
  - Make less than you thought was promised
  - Do something unethical
  - Waive your rights
  - Continue to perform until an arbitrary standard (e.g., "until work has been completed")
- Make sure you have the right to terminate a contract for any reason whatsoever and, in the interest of [fairness](morality-justice.md), they have that right as well.
  - If termination will cause an undue burden, clearly demarcate the consequences (e.g., cancellation fee, notice required before cancellation).
- Watch for "all-in-one" services that could be inadequate for what you need.
- Stay cautious of emerging high-risk areas, especially [new ventures](entrepreneur-1_why.md) or small operations.

Pay close attention to opt-in or opt-out status, since its default state can be a [dark pattern](engineering-design.md).

- Opt-in makes the default condition to opt-out, and it may be discriminatory or work against the interests of the consenting party.
- Opt-out makes the default condition opt-in, which may make the consenting party agree to something they weren't aware of.

In all engagements, either include or request a mediation/arbitration clause or limitation of liability clause.

*Always* read the contracts you sign ("caveat emptor"), and never sign an agreement you don't fully [understand](understanding.md).

- The large print hides what the small print can take away.
- Pay close attention to the definitions at the beginning of the contract, since it typically frames the scope of words and their usage in the document.
- Stay closely aware of the rights for any named entities (e.g., The Holding Company).
  - Often, a third party has the power to perform actions the contract-writer can't do, but can [ask *them* to do it](mgmt-badsystems.md).
- If you can't read it because it's too difficult, make sure someone you trust (e.g., a legal-minded family member, an attorney) skims through it.
- If you don't have access to what you're signing, do *not* sign.

To avoid an urgent [decision](people-decisions.md), give as much time as possible to review a contract (e.g., set a future effective date).

- If you're not sure about *all* the clauses involved in the contract, give it time to read through it or consult a professional who would know more.
- Generally, more disclosures and clauses are *them* trying to protect or insulate themselves from *you*.
- Watch for [dark patterns](engineering-design.md) that streamline your consent, since it's usually to coerce consent, which no reasonable person would agree to if they read them.

Note any terms which may hurt your capacity for choices later.

- When the other party is *much* more powerful than you (e.g., large organization, franchisor), be very cautious about your responsibilities in the arrangement and the procedure for resolving [conflicts](people-5_conflicts.md).
- Pay extra attention to any exclusive or non-exclusive domains, since the power dynamic is tilted against your interests if *they* have unlimited license, but *you* must exclusively use something in particular.
- Pay close attention to the scope of automatic renewal clauses. You may consent to a service that you must pay for *way* longer than you expected.

If there's a warranty, track its duration.

- The warranty period is often a precise measurement before the device was [engineered](engineering.md) for planned obsolescence.
- If it's "as is", expect the possibility you'll [fix something yourself](https://adequate.life/fix/) soon.
- If you can pay for an extended warranty, closely consider if it's worth the cost and its additional terms (since they often profit from it).

*Always* look ahead to how a contract terminates, even if you don't think it ever will.

- Note the region's laws or arbitration remedies that take effect in the most likely adverse events.
  - The rules for the region may be different based on the offering party's location versus yours.
- Watch for mandatory arbitration clauses that prevent you from taking action against the other party in the case of an injury without their approval.
- Calculate the cost for canceling the contract later.
  - If you're required to provide a notice before the cancellation date, you'll be responsible to pay that difference.
  - Add in any administration fees indicated for cancellation.
  - If there is *no* cancellation clause, you'll likely have to pay for the entire term each time.

If at all possible, try to manage every arrangement which could cause adverse situations.

- If you have a [loan](money-2_debt.md), the collateral is *always* at risk of being lawfully claimed by the lienholder, even if you only owe $1.
- In any [employment](jobs-1_why.md) capacity, the non-compete, non-disclosure and non-solicitation agreements are *very* enforceable in a civil lawsuit.
- Fewer contracts mean you get less done, but also have less [risk exposure](safety-riskmgmt.md).

In an uneven power dynamic (e.g., you're an [employee looking for a job](jobs-1_why.md)), don't be afraid to discuss amending the contract.

- Instead of editing the proposed contract itself (since lawyers may require it to be there), add a rider.
  - Make sure the rider says at the bottom, "If any portion of this rider conflicts with the main contract, the terms of this rider will override the terms of the contract."
- You can also simply say, "this contract isn't worth enough to justify these provisions. We can bump the contract if you'd like, but otherwise I'm not interested".
  - They'll typically modify their contract, since they would rather not pay more money.
- Learn [the power of saying "no"](people-5_conflicts.md), since absolutely any contract comes with *many* implications.
  - If you do *not* modify the contract, any verbal promises will *not* be enforceable ("parol evidence rule").
- If you're working with a *very* prestigious party, you *will* be enslaved to their terms unless you have a lawyer specialized in the situation.

*H*igh-value items (e.g., [auto](autos.md), [home](home-maintenance.md)) often require *multiple* parties, and not fulfilling obligations with one party can ripple onto the others:

1. The one-time contract that transfers title to your name, a lease for a duration of time, or possibly a hybrid of lease/purchase.
2. If you don't have all the money up-front, an ongoing contract with a bank.
3. If the bank requires it, you may need to pay for [insurance](money-insurance.md).
4. If you're receiving government assistance (e.g., FHA mortgage loans), that government has another contract involved, with *many* conditions of its own.
5. An extended warranty is essentially an ongoing service agreement, which may be with the seller or a third party.
6. Very frequently, failing an obligation can involve *another* third party (e.g., debt collector), and can rapidly make the experience unpleasant and [bureaucratic](bureaucracy.md).

Throughout the business relationship, watch for changes over time.

- Generally, the more parties involved and named in a contract, the shorter-term that contract will be without modifications.
- Every time you hear about an "update to the terms", *read them*, since you're consenting to them by continuing to engage with that contract.
- Sometimes, your contract can become "grandfathered" into a favorable situation, which may make maintaining that contract *very* worthwhile, even if it costs a bit more or the business' service on that contract becomes scattered.

## Framing and creating contracts

You're typically not obligated to establish the contract (e.g., the right to refuse service) but *are* typically required to perform an existing contract.

- Be *very* mindful of specific [discrimination-based](people-discrimination.md) matters (e.g., racial, [sexual orientation](gender.md), [religion](religion.md)) that create grounds for litigation.
- If you intend to discriminate with those domains, *always* have an ["actual" condition](people-lying.md) that you're discriminating against.
- If you're an agent on behalf of another organization, you're only allowed to amend, cancel or interpret the contract, but cannot be a party stated in that contract.

Always, *always* use [a contract](people-contracts.md), written at least, and preferably notarized.

- Even if it's a quick task or a project for a friend, a contract protects all parties.
- While it may seem obsessive or distrustful, you're protecting yourself against the worst parts of a dramatic minority of acquaintances and interactions (similar to [security cameras](safety-security.md)).

Always send a proposal in writing that outlines the scope of the project:

1. What you will do.
2. Any clear deadlines about when you'll do it.
3. Any clear things you will *not* do.
4. The rate you'll charge for any tasks outside the scope of what you're contracted to do.
5. A formalized contract they're required to sign.

If you're patient and meticulous, you can write a viable contract yourself:

1. Give a summation at the top that indicates the "spirit" of the document, which will prevent a perversion of [justice](morality-justice.md) for its misuse.
2. Only use words with one specific meaning, and be *very* certain you understand that meaning, and focus on simple words or use more words to clarify *everything*.
3. State things in a way that it's *completely* impossible to misunderstand what you mean.
4. If there's a rule defined through an example, make sure you're stating that it's an example (or it may be regarded as a rule itself).
5. Read it over three times:
   - Once for grammar
   - Second for broad scope (i.e., "Does this incorporate everything?")
   - Third for narrow scope (i.e., "How could someone honor this while also hurting me?")

If your contract isn't a standard form, make sure it's well-worded and reviewed by a lawyer, since the burden falls on you to get it correct ("contra proferentem").

- Using language that mandates arbitration may create a ruling strictly in your favor, but mediation *guarantees* more long-term results, including people paying what they owe and renegotiation of more mutually beneficial contracts.
- If you have them use *any* private information, include a nondisclosure agreement.
- Make sure everyone relevant signs *all* the relevant lines of the document.

Whatever price that's been agreed-upon is non-negotiable.

- Do research beforehand about how much others charge for the service you're providing.
- When proposing your rate for a service, either increase your rate for a service with the expectation they'll push back, or make the rate reasonable and non-negotiable.

Be careful with things outside the scope of your experience:

- If you're advising, make sure you're disclaiming that your statements are *not* advice.
- If you're performing, take the time to educate yourself on the industry's idiosyncrasies and take *extra* time on the tasks themselves.
- Fully clarify to them what you *do* and *don't* have authority and experience with.
- When you're unsure, walk away and admit defeat, or try again months or years later (assuming you're still obligated to perform).

If you expect continued business, send a master services agreement, along with a new scope of work for each new project.

- Keep track of anything relevant to the engagement, both in [paperwork](legal-safety.md) and in [accounting](money-accounting.md).

Allow yourself lots of extra time to do everything correctly.

- Most errors come through hastiness.
- You *can* work faster and make more money, but you're more likely to fall into a major legal pitfall later.

Always ask 2 questions, *constantly*:

1. Did they get the message?
2. Can I prove they got the message?

From the beginning, manage expectations with others.

- Articulate what you will and will *not* do, and make sure they thoroughly [understand](understanding.md) it.
  - Avoid using *any* jargon that may confuse them or make the situation vague.
  - Don't use vague statements (e.g., "we always give good service").
  - If possible, communicate *anything* that uses [numbers](math.md) (e.g., effective dates, dollar amounts, limits).
- Record absolutely *everything* you agree with anyone, preferably in writing.
- If anything changes, notify everyone involved immediately and record that in writing as well.
- Use standardized checklists to track what you did and didn't promise and what officially happened.

Document *everything* that might be potentially pertinent.

- Track all key information:
  - Clear articulation of what happened.
  - What everyone agreed to verbally.
  - *Any* limits, clarifications, exceptions, or cautions to the original agreement.
  - Date and time of the notes/discussion.
  - Signed and initialed by everyone involved.
- Pay close attention to special cases:
  - If they declined *anything*, clarify exactly what you offered, and they declined, any potential risks you've communicated that they've heard, and other alternatives you've offered, and they've also declined.
  - Get a signed waiver for any risks they're assuming themselves, or for any declinations or exceptions to the standard agreement.
  - If *you're* declining an agreement, clearly document exactly *why* you are and what can still be arranged.
- Do it as soon as possible (i.e., minutes later), since you'll likely forget key details by the next day.
- It doesn't have to be typed, but it must be legible, and preferably stored in a [well-organized](organization.md) location (with [backups](computers-distsys.md)).
- The validity of the documentation depends heavily on the consistency of your records:
  1. Freehand notes on blank paper (e.g., sticky notes, notepads) give complete freedom for vagueness when recording it, and it's difficult to prove anything was discussed.
  2. Standardized forms (e.g., checklists, call surveys) are more consistent, but still difficult to prove.
  3. Recording an issue in writing to someone else and saving a copy (e.g., sales proposals, binders) indicates the information was communicated.
  4. A signed disclaimer or acknowledgment by the other party indicates the information was understood.
- Electronic documents are excellent, but stay consistent with [organizing them](organization.md):
  - If you can't find the document when you need it, you may as well not bother having it.
  - For digital signatures, make sure they've consented to electronic-only document delivery.
  - Either import the information from a cell phone, or have them call an office phone number with a recorded line.
    - Store voicemails electronically.
    - Text messages require a date/time and actual contact information (i.e., phone # for SMS or phone/email for MMS).
  - Email is formal written communication, so do *not* speak badly about others or admit to an error.
    - Treat [OCR/ICR scans](computers-ocr.md) and faxes like email attachments.
  - Save any files (e.g., PDFs) as formal documentation.
  - Take screenshots of anything that may be relevant.

If you or they are at all unsure, make the record more official.

- If the contract has significant conditions, have it notarized.
- If you're unsure about the owner of a title, get it bonded or get title insurance.
- If they expect any relevant [insurance](money-insurance.md), make sure you get a certificate of insurance from your agent.

If you're hiring anyone, always include a non-compete, non-solicitation, and nondisclosure agreement for the duration of their employment.

- Don't extend the non-compete term beyond their employment with you, since it's [unethical](morality.md) and sometimes illegal.
- If you're *really* concerned about some form of [intellectual property](legal-ip.md), make an ironclad nondisclosure agreement instead.

Frame the language of the contracts with the other person's interests in mind, preferably *more* inclined toward their interests than your own.

- Only emphasize the specific interests which work the most in your favor, and give a wide license to terminate the contract.
  - Finding a new service provider is *much* less trouble than forcing a current service provider to perform, especially if the contract has clearly stated their fees for cancellation.
- You can often win out in the short term with a more constraining contract on the other party, but it generates tension that could lead to a legal battle later.
- Even if you're using subtle tricks to hide what you're doing, you'll damage your long-term reputation when people eventually find out.

Do *not* include predatory clauses that could force noncompliance or get you in legal trouble.

- Unless you're paying them a *lot* of money, a no moonlighting policy is unethical.
- Reducing features or the scope of the contract is sometimes legally defined as a cancellation of service.

Generally, avoid lifetime contracts unless *both* sides are providing continued lifetime investments:

- Lifetime contracts for a one-time payment or limited obligation are always an undue burden on one side, meaning the quality of their performance will suffer over that lifetime or the entity may become unable to keep performing.
- The only time a lifetime contract is worth it is when that lifetime is significantly shorter (e.g., terminal cancer) or when there's a secondary use for the consideration (e.g., [investing](money-investing.md) the proceeds into a continuous source of income).
- Instead, make a significant long-term contract with a fixed number of years (e.g., 5 years, 20 years).

## Amending contracts

Stay on top of *any* changes to the contract.

- The provider may force binding arbitration.
- There may be new opt-out windows for added components or cancellation of a service.

Watch and confront any drift from the agreed terms (e.g., situation has changed).

- Stay aware of specific relevant domains which may change the situation:
  - Any new connections with other entities or related fields.
  - All geographically nearby associations to them or you.
  - All new risk factors that emerge (e.g., [news stories](stories-storytellers.md)).
  - Possible changes from potential new arrangements they make with others (e.g., bank loans).
  - Possible *other* people who may be affected by the change, and all of the above for *them*.
- Append or amend the contract as needed to keep everyone safely within their scope of duty.
  - Inform them *as soon as possible* about the consequences of any changes you're aware of.
  - Communicate all new changes *before* they happen.
- Let *every* affected party know of any relevant changes as soon as possible, and preferably in writing.
- Make sure you're only performing according to the parties with the authority to amend or cancel the contract.

Every time the contract renews (e.g., annually, semi-annually, quarterly), you're *very* obligated to review *everything*:

- The current status of the agreement.
- Increased costs from various factors (e.g., inflation, population growth, urban decay).
- Recommendations for better opportunities (e.g., low prices for scaling operations, discounts by changing agreements to an updated one).
- Alternative options that exist and are available if their situation has changed.
- Ask important, in-depth questions about the agreement:
  - Why are you still in business with them?
  - How will that relationship unfold in the future?

If a contract will be cancelled, make sure all relevant parties are *completely* aware.

- If you're *completely* terminating your engagement with them, send them an off-account letter to clearly indicate your arrangement.
- Let everyone know, send mail, return money promptly, and keep customers publicly informed.

### Performing a contract

If you're required to mail something, make sure the package will be signed for, and have a clause/backup plan for the possibility the package doesn't arrive.

Perform only within your range of expertise and comfort.

- Be careful moving out of your comfort zone to round out your service capacity.
- Keep an excellent attorney with a specialization in your needed legal coverage.

There's usually a critical time frame where something *must* be performed.

- You usually have a reasonable amount of time, assuming you're somewhat [organized](organization.md).
- Keep yourself organized with a daily [project management](mgmt-2_projects.md)/suspense/diary system that tracks *all* important transactions.
- Make sure [everyone in your organization uses that system](mgmt-4_status.md), and ask for help if you ever get behind.

Stay on top of communication.

- Most legal notices give 30-60 days to perform, which means you may be late if you check your mail once a month.
- Make a habit of checking your email/voicemail/mail every week.
- Thoroughly [change your address](home-moving.md) every time you move (e.g., [insurance](money-insurance.md), bank information, [loans](money-2_debt.md), etc.).

Try to give degrees of separation whenever possible.

- Run things through a PO box instead of a physical address.
- Establish a trust, corporation, not-for-profit organization, or limited liability company for large-scale activities.
- Use bank safety deposit boxes and storage units instead of storing things on-site.

When an agreement has adverse consequences for termination, watch for people performing strange behavior with it.

- They may try tempting you to breach the contract, then [lie](people-lying.md) that they didn't know it was a breach but need to enforce it.
- If the person who cancels the contract must pay, then they may try to get *you* to terminate the engagement.

If you're not sure, do nothing.

- Except for fully defined "negligence", doing nothing rarely runs the risk of implicitly consenting and there's no prior performance to create an implicit contract.
- It may be harsh at times, but non-involvement is the strongest way to be legally safe.
- If you *do* care about the person who you may be able to help, it typically doesn't hurt to communicate why you're not helping them (e.g., "I would rather not establish a precedent").
- However, while *not* acting is the most legally safe thing to do, it's often also [unethical](morality.md).

Be careful when [transporting goods](logistics.md).

- Even when you don't know, you can often become the accomplice to a crime.
- Require them to seal it so you can't know what's in the container.
- Make sure the seal is unbroken until the receiving party signs off on it.