What you should know
A contract for services doesn’t have to be in writing. In most cases, it can be an oral agreement.
Let’s say you hire a babysitter. It will likely happen over the phone or in a casual conversation. The moment you strike an agreement, you have made a contract.
But it’s still best to put your agreement in writing if you can. Especially if there’s a lot of money involved or you want a particular outcome.
You may need to prove what everyone agreed to. With an oral agreement, there’s no paper trail to identify what both parties agreed to initially.
There can also be misunderstandings when nothing’s in writing. Maybe one of you thought you were agreeing to something a bit different; with no record of the arrangement there’s no way to check what was the intention of the parties.
Let’s say you hire someone to perform a service at some point in the future: could be next week or even next year. This is called a future performance contract. The law requires a few things for this type of contract.
Rules for a future performance contract
One: It must be in writing.
Two: The contract must have certain things in it, like the purchase price, start and finish dates, and your right as the buyer to cancel. If any of the required information is missing, you can cancel the contract.
And number three: You must receive a copy of the contract from the service provider, within 15 days. If you don’t, you can cancel the contract.
Rules for a direct sales contract
There’s also door-to-door sales, which have their own set of rules.
If someone comes to your door and offers to wash your windows or perform some other service, the contract you make with them is called a direct sales contract. We've got information on door-to-door and other direct sales contracts.
There are some things the law says a service provider can’t do. They can’t mislead you, for instance, or use other unfair practices.
Here are examples. They can’t:
- Claim that what they’re selling is of high quality when it actually isn’t.
- Say it’s on sale when it’s not.
They also can’t:
- Apply “undue pressure” to force you to buy. For example: they can’t urge you to sign right here and now or you’ll lose out on the “special price” they’re offering.
- Knowingly exploit you, like taking advantage of a disability or language issue you might have, knowing it might prevent you from protecting your own interests.
And if they do something misleading or unfair, it makes the contract not binding.
Make a written contract
Tip 1. Put it in writing
If there's a lot of money involved, or if it's a very important project to you, put your agreement in writing.
If the service provider doesn’t offer a written contract, write one yourself. It’s a good idea to start with a template. We’ve got a template for you here.
Tip 2. Cover off important points
Include in your contract all the details you care about. Let’s say your timeline is tight. You want the work done by a certain date. Put that in — the specific date.
Otherwise the service provider has wiggle room. By law they can take a “reasonable time” to finish the job — and that may be longer than you have.
Make sure any promises or guarantees are in writing and clear. Don’t say “the work will be done well” — specify what “well” means. Vaguely worded guarantees, or warranties buried in qualifications, aren’t worth much.
Write in the consequences if the contract is broken. What’ll happen if the service provider doesn’t do what they say they’ll do? You might say the agreement is void and you can walk away. You can also say that you don’t have to pay the full amount if the work is not completed by a certain date. It will be up to you and the service provider to agree on these finer points.
Tip 3. What to cut out
Some service contracts have “standard terms” that may not make sense in your case. They don’t have to be in there!
It’s best to take those default terms out. If something doesn’t apply to you, cross it out, initial the change, and get the other side to initial too before signing the agreement or as part of signing.
Tip 4. Careful with deposits
Some service providers will require a deposit up front before getting started.
This isn’t necessarily a red flag. But be careful, especially if the deposit is a big number. Even if the service provider is in the wrong, it can be very difficult to get your deposit back.
It may be “non-refundable”, or you may have to hire a lawyer and potentially go to court (which is expensive and time consuming!).
More steps to protect yourself
Step 1. Do your research
Ask the service provider for the names and phone numbers of other people they’ve worked for.
These are called references. Phone these people and ask them: What was the quality of the work? Was it done on time? On budget?
Your candidate’s reputation likely precedes them. Check them out online. Other customers may have posted reviews of their work. Search the service provider’s name plus “reviews” or “complaints.”
Contact the local Better Business Bureau to find out what they know of the service provider you’re thinking of hiring.
Step 2. Negotiate with confidence
When you make an offer or counteroffer to the service provider, say it with confidence. Be polite and reasonable, but firm.
Step 3. Get a receipt
When you offer to pay in cash, some service providers may give you a discount.
But if you do, there’s typically no receipt, you’ll have no evidence you paid the service provider, and less proof of your arrangement if there’s a problem.
These steps are just a summary of what you can do. We have more if you want to go further. See our in-depth coverage of hiring someone to perform a service.