Do I Really Need a Contract? 5 Reasons You Can’t Afford to Skip It

Not having a proper contract is the fastest way to lose money, waste time, and create avoidable legal mess.

And no, a few emails or a Canva proposal don’t count. In 2025, with more service-based businesses, digital products, and remote teams than ever before, contracts aren’t a “nice to have”, they’re your non-negotiable foundation.

Let’s break it down. 

What Actually Is a Contract? 

A contract is a legally binding agreement between two (or more) parties that sets the expectations, responsibilities, and protections for everyone involved. It protects:

• Your boundaries 

Why a Verbal Agreement (or an Email) Isn’t Enough 

We get it. You’ve probably had that moment:

“Let’s just keep it casual. We trust each other.”

Here’s the problem:

If something goes wrong, and eventually, something will, you’ll have no enforceable way to back yourself up.

And while, yes, a contract can technically exist through email chains or verbal agreements, it’s:

• Harder to prove
• Way more expensive to enforce
• A total grey area if things go south

Imagine trying to collect a late payment, fix scope creep, or protect your course content... without anything clearly agreed in writing.

You’ll spend more time untangling the mess than doing the actual work. 

5 Reasons You Need a Contract for Every Project, Client, or Collab

1. To Get Paid (On Time, Every Time)

No one likes chasing invoices.

With a clear contract, you can set:

• Payment schedules
• Due dates
• Late fees
• Cancellation policies
• Non-payment consequences

Foundd Tip: Including a clause that charges interest on overdue payments isn’t petty. It’s standard. And it encourages prompt payment.

2. To Set Boundaries Around Scope 

Ever had a client push for “just one more thing” that turns into 4 hours of unpaid work?

That’s what we call scope creep, and it happens all the time when you don’t define deliverables in a contract. Good contracts clarify:

• What’s included
• What’s not
• How revisions work
• What happens when the scope changes

Result? Way fewer awkward convos and much healthier boundaries.

3. To Protect Your IP + Creative Work 

If you create assets, designs, content, templates, photos, branding, your work = your intellectual property. Without a proper contract:

• Clients can claim ownership of your work
• You may not be able to reuse or resell what you created
• Someone else could register your content as theirs (yes, it happens)

Contracts define who owns what, when, and how it can be used. This is crucial for creatives, course creators, and digital product sellers.

Foundd Tip:  If you are creating something for a client and the goal is for them to own the IP that’s fine just make ownership happens after ALL fees are paid!

4. To Handle Disputes Like a Pro 

Things go wrong. Expectations get misaligned. Miscommunication happens.

A dispute resolution clause in your contract outlines: 

• How issues will be addressed (e.g., mediation, arbitration) 
• Where any legal proceedings would take place 
• What laws govern the agreement

This makes resolving issues faster, cheaper, and less stressful for everyone involved.

Foundd Tip: Without this clause, you could end up in a legal battle across borders with no clarity on whose rules apply. No bueno.

5. To Look Legit + Be Taken Seriously 

Nothing says “I run a real business” like a clear, professional contract.

Clients notice. Collaborators notice. Potential partners definitely notice.

It sets the tone early:

“I respect your time and money. I expect the same in return.”

You don’t have to be cold or corporate. But having clear agreements in place is a form of leadership, and confidence.

“But My Client Said It Was Fine…”

Cool. Until they don’t. 
Verbal agreements are only as strong as the person’s memory, and mood.

What happens when:

• The client forgets what they agreed to?
• They ghost you halfway through a project?
• They say they didn’t approve that extra invoice?

You need more than trust. You need terms. And those terms need to be signed. 

What Should Every Contract Include?

Every good contract should cover the following essentials:

• Parties involved: Who’s entering into the agreement
• Scope of work: What’s being delivered
• Timelines + milestones
• Payment terms + late fees
• Cancellation + refund policies
• Intellectual property ownership
• Confidentiality clauses
• Dispute resolution + governing law

Bonus Tip: Make sure both parties sign it before any work begins. Always. 

But What If I Don’t Know Where to Start? 

That’s exactly why we created our industry specific Foundd Legal Templates.

They’re:

• Lawyer-drafted
• Made specifically for online business owners
• Written in plain English
• Easy to customise
• And yes, they actually hold up legally

Whether you’re a coach, freelancer, service provider, or digital product creator, we’ve got a contract for your offer.

🛠️ Not sure which one you need?

Take our Quiz to find the exact legal documents for your business type, structure, and offer.