Negotiations can be tough. Everyone has done some type of negotiating in their life on some level. Whether it be with their parents or teachers, bosses or partners, we have all experienced the push and pull it takes to come out with an amicable (or not so amicable) agreement. Those of us who may have to negotiate at a higher level, let’s say for our occupation, would benefit from courses such as Negotiation: Problems Solved, Not Battles Fought to sharpen these often used skills.
Whatever the case may be, sometimes a formal memorialization of the negotiations is essential. Putting it down in writing, short of a formal contract, is a great way to avoid misunderstandings and disagreements. And even better to avoid costly litigation.
So what does an agreement letter look like? There are basic components to any memorialized agreement. Basically, you want to cover the who, what, when, why, and where (if needed). The point of an agreement letter is to make sure you and the other party or parties to the agreement are on the same page.
Here is a sample template of a standard agreement letter:
April 1, 2014
Mr. Sergio Sanchez
Sanchez & Company
1010 Main Street
Los Angeles, CA 91801
Dear Mr. Sanchez:
The purpose of this letter of agreement is to outline the scope of the writing services that [FREELANCER NAME] will perform for Sanchez & Company.
Services to Be Rendered
[FREELANCER NAME] agrees to write a four-page brochure describing the engineering services of Sanchez & Company. Information for the brochure will be provided, on a timely basis, through existing corporate materials as well as through interviews with Sergio Sanchez and other appropriate Sanchez & Company staff.
Sanchez & Company 1) will provide all photos, charts and other graphics to be included in the brochure, and 2) is responsible for printing and other production costs related to the brochure.
Services will be performed at the rate of $60 per hour. I estimate that this project will take between 25 and 40 hours and cost between $1,500 and $2,400. If fewer than 25 hours are required, Sanchez & Company will be charged only for the actual hours [FREELANCER NAME] works on the project.
The estimated fee outlined above includes a first draft and one edit of the four-page brochure. Hours for additional edits and/or a longer brochure will be billed at the rate of $60 an hour.
All hours in excess of the estimated project maximum (40 hours) listed in the Fee section must be approved in writing by Sanchez & Company.
[FREELANCER NAME] will deliver a first draft of the brochure to Sanchez & Company by Wednesday, April 26. The final edited version (including hard copy and a computer disk in Word) will be delivered by Monday, May 2, as long as Sanchez & Company staff members are available on a timely basis to discuss changes to the original.
Terms of Payment
$750 will be paid to [FREELANCER NAME] within five days after the signing of this letter of agreement. Sanchez & Company will be billed for the balance at the end of the project (tentatively May 2) and payment in full will be due within 15 days.
City, State & Zip Code
Sanchez & Company
As with any agreement letter, the key terms to the agreement have to be the focus. Outlining the nature of the project with the utmost clarity will produce very little disagreement down the road.
Tailor To Your Specific Project
As with any legal protections, your agreement letter will vary depending on the nature of your project. The above sample addresses the topics important to a freelance writer agreement. For that type of agreement, terms such as compensation, deadlines, and content will receive the most attention and precision so as to eliminate any potential for misunderstandings.
Other types of subject matter might need to include additional terms. Force majeure, for example, protects a party from having to fulfill their obligation if an unforeseen circumstance out of their control occurs. This would include “acts of God” and other similar disruptions not caused by the party attempting to take advantage of the force majeure clause. These types of clauses are very popular in agreements for entertainment projects. Recording on set in the Gulf of Mexico isn’t going to be on schedule if a surprise hurricane decides to show up. Those who have invested a lot of time and money want to protect themselves and their investment.
Agreement Letter vs Contract
An agreement letter is generally more useful in a less formal setting than a lengthy contract would be. Serious business negotiations involving multiple layers of business transactions and agreements relating to those transactions will generally require a very thorough, detailed, and voluminous formal contract. Even in the most routine of business transactions, formal contracts are the best way to go because of the risks involved.
However, an agreement letter is not as complicated as a contract yet more solidified than just a handshake. Putting terms of an agreement in writing is extremely important when new parties engage in business dealings with one another.
Even the most seasoned of corporate business transactions can misunderstand or be misunderstood by the opposing party to an agreement. The golden rule is to make an agreement letter just to be clear, safe, and free from the strains of litigation. Sometimes parties can overlook simple matters that are integral to the agreement. This oversight can cost a party to the agreement lots of time and money that could have simply been avoided had the terms been written down and signed in a letter.
The negotiation process can be daunting. But there’s no need to go it alone! Get informative and helpful information here:
- Negotiation Process: Four Key Steps in Any Negotiation
- How to Supercharge Your Pitch in 1 Hour
- Physicians: Find the Right Job and Negotiate a Better Contract
- Give a Little, Take a Little: The Art of Negotiation