Common Reasons for Verbal Agreements

Here are some common reasons Design Firms decide to bypass a written contract and just have a verbal agreement. Have you had any of these thoughts at some point in your career?

“I’ve Done this Project Before”

Even if you’ve performed the same kind of project for a client, you need a new contract for every new job.

Skipping the contract on even one routine project can leave you completely unprotected if something were to happen.

Even if you have an established business relationship working off the same set of terms, those previously agreed to terms may not protect you on future work.

Not to mention, routine work can easily take a turn for the unexpected. No matter how many times you’ve done a project for the same client, each project has its unique challenges and needs a brand new written contract.

“It’s My Intellectual Property”

Who owns your designs, drawings, and CAD files? You may assume that you retain ownership over your work, but this isn’t necessarily the case when you’re operating with verbal agreements.

If you’re subcontracting without a clear contract, you may find yourself fighting for rights to your own work. 

A clear written contract protects you against losing intellectual property.

“It’s Only a Small Project or Fee”

Small projects with small fees can still put you at a large liability risk, as any architectural or engineering project carries inherent risk. 

Simply observing a contractor’s work on behalf of your client can expose you to massive liability should things go awry.

Even in a small task, you need the protection of a contract that expressly limits your responsibilities and protects you from any liabilities. 

“It’s Just Part of the Same Job”

If you’ve finished up a project that you had a written contract for, you need another contract for any additional work.

You aren’t covered by your initial contract’s terms if you’re doing new work or work outside the scope of what you originally agreed to.

If any claims are made against you as a result of the new work, any previously made liability limiting contract terms aren’t guaranteed to protect you.

Get Yourself Covered in Writing

Even the best client relationship can benefit from written agreements. If you’re relying on memory to cover every clause, risk, or agreement term, you’re likely to slip up at one time or another. This could very well be the one time that serious damages occur. (Check out this case study)

And memory is notoriously unreliable. Even if you’ve gone over an issue in a verbal agreement, different recollections can easily land you in mediation or court with a judge trying to work out whose version of the story is the correct one.

Also, what happens if a client simply decides not to pay your fee?

It isn’t unheard of for clients to disagree on how much they agreed to pay you or when payment is due.

The AIA and EJCDC provide several great contract agreement templates for Design Professionals. Use these as a baseline for what to include in your written contracts, and add project-specific details where necessary. 

We also recommend downloading our free Contract Review Guide for Design Professionals. We break down the important aspects of your Design Contract in an easy-to-read format.

Conclusion

In summary, don’t invest time into any project without a written agreement between you and your client. While verbal agreements may initially cause less friction with your client, it doesn’t pay off in the long run.

Contracts provide clarity before any emotions are involved or investments are made. Agreements done right only serve to strengthen your business and client relationships.

Think it’s awkward to hammer out the project details beforehand? Any short-term friction with contract negotiation doesn’t compare to the damaging effects of going through legal proceedings with a client. 

Whether the project is big or small, whether the client is a new acquaintance or someone you’ve done a dozen projects with… get everything in writing, every time!