Many consultants and coaches get into trouble because they fail to clearly document the services they are offering, make assumptions, and have expectations that are different than the clients. Therefore, it is essential that you draft a letter of agreement, so both parties have the same expectations.
Most problems arise between consultants, coaches, and their clients because of misaligned assumptions and expectations. There is a significant difference between Assumptions, Expectations, and Agreements.
Assumptions and Expectations
An assumption is something that is accepted as true or certain, but it is without proof. An expectation is when you have a strong belief that something will happen.
Assumptions and expectations live in all of us and are based on our life experiences. Assumptions lead you to have expectations about the future. Expectations aren’t inherently bad. They allow us to let go of the need to pay attention to everything around us. There are many things in life that you can reasonably expect to happen based on assumptions you make about how things have always happened. For example, the sun rising in the east and setting in the west, the tides occurring about twice a day, and having enough air to breathe.
However, things get more complicated when we get into the realm of other people’s expectations. When you have expectations about another person, and they don’t happen as you expected, it often drives a wedge between you and that other person, causing you to become judgmental, upset, and even angry with the other party.
Expectations happen in the world of assumptions. Assumptions and expectations occur when you take things for granted and you have not created any agreement around the results you want to produce.
Take something as simple as a red light at an intersection. You expect that cars will stop at a red light. You have that expectation because of the agreement we all made when we got our driver’s license to abide by the laws and stop at red lights. Without the agreement, red lights would not work.
We often encounter problems in a relationship because everyone sees the world slightly differently, and as a result, they have different expectations. One person’s interpretation of something can mean something very different to another. That is why we need agreements.
Agreements dissolve assumptions and create a common set of expectations. They make relationships work when two or more people commit to their agreements. However, agreements require advance thought to consider what you want, how you want it, by when, and in what form. The more details you can think about including in an agreement, the less chance there is for misinterpretation.
Letter of Agreement
A letter of agreement is a written document between two or more parties who want a simple way to formalize their discussions on a transaction to avoid any possibility of misinterpretations.
While you can have a verbal agreement, it is much better to have an agreement in writing if a dispute comes about. A letter of agreement defines the terms of your transaction or promised services and can be enforceable by law.
A letter of agreement is similar to a contract; however, contracts are considered far more official. That said, both a letter of agreement and a contract are enforceable from a legal standpoint. A letter of agreement is said to go into force when you either obtain the signatures of all parties or just by exchanging letters detailing the agreement.
A letter of agreement should be used when a more complex contract is not necessary due to the uncomplicated facts regarding a transaction, as is often the case for a consulting or coaching transaction. A letter of agreement is straightforward because it really only needs to ensure three things are included: an offer, a consideration, and an acceptance.
A letter of agreement is most often written by the party making the offer and on their letterhead. It details the understanding between the parties and is documented in a favorable way with the expectation that the other party will agree.
A letter of agreement should contain the following basic information:
The date.
A list of the parties involved.
A subject line.
A statement indicating that the agreement will serve as proof that all involved parties are of a mutual understanding.
An explanation describing the offer and the intentions of the person or company making it.
The terms and conditions of the agreement including:
How long it will be in place.
The service being discussed for a possible agreement.
The price of the offer.
The timeframe allowed to pay in full if multiple payments are expected.
Any laws or regulations that may apply to the transaction.
A signature.
How will you use a letter of agreement, so both parties have the same expectations?
