Contractors often ask me whether or not all the cases I write about are actually real-world situations; the answer is yes, they are. Every single one of them is an account of a Contractor’s problem recently encountered. I rarely have a problem finding something to write an article about – in fact, I’m generally spoilt for choice! But by following four simple rules, such problems can often be avoided. At worst, the problems either won’t take the Contractor by surprise, or at least their effects can be reduced. I call these the ‘Egos Rules’:
Rule 1: Make sure you understand the contract and all its implications before you sign.
This one’s obvious really, when you think about it. You’re being asked to sign a contract which will govern, restrict, and control you for the next 3/6/12 months of your life. It will control how you spend your time, what you get paid, and in what circumstances you don’t get paid! Even when the contract’s over, some parts of it will linger on – such as a restriction on whether or not you can go back to the Client, either direct, or through another agency.
It’s important not to be so blinkered by the excitement of the particular opportunity on offer that you sign without fully reading and understanding the whole contract – and by that I don’t mean just the Schedule. There’s at least one agency whose standard form of contract shows ‘Termination Notice: 4 weeks’ - but when you read the small print, you find this only applies to termination by the agent, and it clearly says the Contractor has no rights to terminate before the end of the contract period. Some might think that misleading…
Remember that the contract means what it says – in general terms, words used in legal documents have exactly the same meaning as they do in ordinary day-to-day life. The agent may tell you it means something different – or he may tell you how his company would interpret it. For example, if you sign a contract which clearly gives you no right to terminate early, but the agent tells you they’ll let you do so if you can’t get on with your working colleagues, or if you or your partner can’t cope with you only being home at weekends, don’t expect to be able to rely on that assurance– it’s worth no more than the paper it’s written on. Or not, if you see what I mean.
In short, be sure you understand the whole contract, and how it will affect you, your life, and your business. Take advice, if necessary. And make sure all the terms that are important to you are in there.
Rule 2: Treat everything in the contract as negotiable until you sign. And don't be afraid to negotiate!
The successful agent is a highly skilled salesman, with his own agenda. He uses his skills to secure opportunities with Clients for his agency. And then to sell those opportunities to Contractors. The starting point has to be that the agency doesn’t have to enter a contract with you, and you don’t have to accept it. And if you’ve been astute so far, you’ll have let it be known that whilst you’d quite like the position, there are also other opportunities open for you at the moment, and if the terms on offer here aren’t right…you get the picture, I’m sure.
If the terms on offer aren’t what you want, this is the point at which to try and change them – within reason, of course. But if the revised terms still make commercial sense to the agent, there’s no real reason why he shouldn’t agree. If on the basis of those revised terms he can get you into the position with the Client, then he makes his sale, and earns his commission. If on the other hand he doesn’t come to terms with you, then he either has to find another Contractor who will accept, or lose the opportunity to another agent. His objective at this point is to get the Contractor ‘tied up’ as quickly as possible. As soon as he’s done that, to all practical intents and purposes, he’s made his commission.
Several tricks are in common use, with the object of trying to dissuade the Contractor from attempting to negotiate terms, or of persuading the Contractor to sign without having a chance to consider or take advice on them.
You have to be able to see these tricks for what they are. ‘Can’t’ generally means ‘won’t’ – and ‘won’t’ expands to ‘don’t want to, but might if I can be persuaded that it’s in my own interests to do so’.
No-one’s forcing you to sign. You’re being offered an opportunity – it’s up to you to consider whether all the terms on which it’s offered are acceptable. If not, try and get the unacceptable terms changed. One thing’s sure – if you don’t try, you won’t succeed.
I know of at least one agency which likes to take the view ‘our terms are designed to be fair to both parties, and they’re not negotiable’. I also know of a local garage which advertises ‘the price you see is what you pay’. I strongly suspect that if either agency or garage stick to this, neither will survive for long. Those who dig their heels in for the sake of such a commercially unjustifiable principle will put themselves seriously at risk.
The important thing to realise is that at this point, where you have yet to sign and yet to start work, your negotiating position is as strong as it will ever be. Don’t waste the opportunity.
Rule 3: Don't leave home without it - make sure all terms are agreed and signed before you start work.
Sometimes things happen in a hurry, and there can be a strong temptation to start work straightaway. and leave the contract details till later.
Almost every time I’ve known this happen, there’s been cause for regret. I even broke my own rule and did it myself recently with a piece of legal work – and found myself seriously taken advantage of, to my cost. You live and learn.
Once you actually start work, you cross a psychological barrier. You have more than just an opportunity to lose if you fail to agree terms – you’ve actually spent real working time. As a result, your negotiating position is immeasurably weakened – and if the agent has sent you his own form of contract, then the simple act on your part of starting work without challenging the terms will almost certainly amount to legal acceptance of his terms – even if you haven’t signed. So don’t do it! Say you won’t start until all the details are agreed and signed – and turn the pressure of time to your own advantage.
Rule 4: Always honour the terms of contracts you enter – and expect those you contract with to do the same.
If you’ve followed Rule 1, then you’ll know what’s in the contract, what’s expected of you, and what you’re entitled to expect of the other party. You can’t hope to honour the terms of your contract unless you know what those terms are. Keep your current contract handy, and check it from time to time – and certainly before taking any major step. Don’t rely on your memory. The contract governs your situation, and the responsibilities of both parties.
As an example, it should go without saying that you won’t think about terminating early if you haven’t got the contractual right to do so – but it still happens that from time to time I encounter a Contractor who has become dissatisfied, has gone through the major effort required to find another contract, and has purported to give notice - and has then been surprised to be told that he/she doesn’t have the legal right to do so!
Finally, keep a particular eye on the credit terms you’ve agreed with your agent. If payments start to become late, act immediately. Insist on speaking to the agent. If you’re not satisfied with the explanation and the problem is not resolved straightaway, let the Client know. Be prepared to stop work until the problem’s resolved, and if necessary to terminate the contract on the grounds of the agent’s breach in failing to pay you on time. Don’t let loyalty to the Client result in the risk of a bigger bad debt for you. It may be rare for this to happen – but from time to time, it does.
14 November 1997
I'd really appreciate your feedback on this FAQ - so mail me and tell me what you think of it, if it's been useful to you, or let me know of any specific problem you have where I may be able to help.
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