Contract Mistake: Starting Work Before Contract is Signed

As a freelance consultant, "Lester" landed a significant project with a big company. Excitement took over, leading him to agree on the project scope and his hourly rate over the phone, without a written contract in place.

20 hours into the project, the company presented Lester with a one-sided contract, leaving him with little room to negotiate. Feeling that he had zero leverage, he signed the contract. By this point, his excitement was quickly fading.

Then the company refused to pay for the initial 20 hours of work, saying that there was no agreement before the contract was signed. Now the excitement turned into resentment.

While Lester could sue for payment, the risks were high – a ruined client relationship, legal expenses, and uncertain outcomes.

Most of the time, it’s not worth it to litigate over a verbal contract because you never know how it’s going to end. He would have to go to court and testify, and of course the company would get to testify too. He'd spend thousands in legal fees to pursue payment for 20 hours - it wasn't worth it.

Lester's lesson underscores the importance of establishing contracts before delving into work. While the allure of a verbal or handshake deal may seem convenient, the risks are substantial.