While, of course, it is crucial to have a firm binding written contract, what many businesses fail to realize is that it can be just as, if not more important, to clarify understandings before the contract. This is because customers often gloss over the “fine print” of a contract, and if something goes differently than what the customer had expected, then it can mean trouble. In such case, of course, the contract will support your position, but why get yourself into the hassle of defending a lawsuit when you can avoid it with a clear understanding.
How can one clarify an understanding with his customer? A common method I often use when talking to potential clients is by illustrating with an example. For instance (see, I’m doing it here), say you are selling 10 widgets for $10 a piece. Before making the sale, verbally advise your customer that this comes out to a $100 sale ($10 x 10 widgets) and do not let the customer do the math himself. While this seems obvious, particularly on this example, you would be surprised how often this is overlooked, particularly during the heat of the workday when many deals are happening at once.
Don’t just rely on a written contract. By verbally clarifying a customer’s understanding of a deal, you can avoid costly litigation down the road.