Running our own businesses, be it self employed or an agency, inevitably involves dealing with contracts. I am not going into the legal stuff here. That is where you need legal expertise. But I do have a few guidelines for 'testing' if a contract or business agreement is reasonable and fair.

All contracts start of with a definition of who is who. Usually with terms like the customer and the supplier. That enables everything from there onward to be generic, often then using a proven off-the-shelf contract so the legal folks don't need to write everything from scratch.

The instant test of a reasonable and fair contract is to turn it round as far as the overall business makes sense. Swap over the supplier and the customer. Would you still agree to it? Would they?

An NDA needs to be mutual

An easy to understand example is an NDA (Non Disclosure Agreement), where we agree to not disclose any information we may learn that is not already in the public domain. Typically there will be commercial reasons they don't want us to spill the beans to the public or their competitors. Fair enough, but lets turn that the other way round. Flip the role of customer and supplier, would they be prepared to sign it?

I can't think of anything I may disclose to a customer I wouldn't want disclosed, but there is a principle at stake. When an NDA is required, I always insist on a mutual NDA. If a prospective customer is not prepared for something as simple as an NDA to be mutual, what does it say about their attitude to contracts in general?

Restriction of future customers

Lets move on to another clause that big companies like. The one about not subsequently working for a competitor. The kind of clause some businesses make sufficiently far reaching that it could be interpreted as never working ever again should it take their fancy, and ignoring whether such a clause can be enforceable in most legal systems.

Depending on the terms and duration, that may acceptable for a direct employment contract or it may be unfairly restrictive. That is not what we are talking about here. This is a contract between a supplier and a customer. Should a customer include such terms in a contract with a supplier? Lets turn it the other way round. If we are not allowed to subsequently work with their competitors, should they be allowed to subsequently work with our competitors?

As a supplier, we owe our customers assurance we are not going to run off and do the same but cheaper or better for their immediate competitors. But that should be covered by the NDA and any terms about ownership of product. In most cases it boils down to the customer buying use of our expertise, not our entire business.

A couple of easy to present examples is as much as I want to write here. As I said at the start, the test of a reasonable and fair contract is to turn it the other way round. Or back to the proverb:

What's good for the goose is good for the gander.