Legal Precautions When Writing Proposals

At the end of radio commercials that offer spectacular savings or promotional offers, it is typical for a radio announcer to blast through two paragraphs worth of legal ramblings in about ten seconds. They do this because they want to put some limitations and structure to the offer that they make. We need to take some of the same precautions when we write proposals.

Business Law 101
I’m no lawyer, so the legal advice that you get from me is worth the paper it is printed on. Still, there are a few basic concepts that all proposal writers should know about contract law. The most fundamental of these concepts is how a contract is made.

To make a legally binding contract, two things have to happen. First, one party has to make an offer. Second, the other party has to accept the offer. When this happens, you have a contract. This is overly simplified, of course. There are exceptions, stipulations, and conditions that may apply. For example, in some circumstances—real estate in particular—a contract cannot exist unless it is written. Basically, though, making a contract is no more difficult than what is described above.

The reason that you need to understand this is because, depending on how you write it, a proposal could be construed as a legal offer. That’s fine, of course, as long as you mean for it to be a legal offer. But if it is construed as a legal offer, and someone accepts your offer, you had better be able to deliver everything you promised in the proposal. This can be a problem if in your zeal to make a sale you inadvertently make a promise or guarantee that you can’t deliver.

Say, for example, that you make the claim that the CopyMaster 2000 will make the buyer’s office run so efficiently that it will increase sales. It’s an innocent statement; you’re just trying to communicate that the copier runs so well and so efficiently that they’ll have extra time in the day to focus on selling. But suppose that your customer actually buys it thinking it will increase their sales. If their sales go up, you’re in great shape. If sales go down, though, you could be in a pickle. The point is that you need to be careful what you say in a proposal because someone may hold you to your word.

“This Offer is Valid Through…”
Next to promising something that you can’t deliver, one of the most disheartening things that you’ll ever experience as a salesperson is to have a customer show up wanting to buy something based on pricing that is years old. Think it’s never happened? Think again, and here’s why.
From a legal perspective, once you make an offer, that offer is valid until someone accepts it or you retract it. In other words, if someone accepts your offer, then like it or not, you just entered into a contract. You can argue, but if they choose to, they can take you to court. This is precisely why price lists includes verbiage that say something along the lines of, “this pricing is subject to change without notice.”

So if you or one of your salespeople writes a proposal, but doesn’t include language that says something like, “this proposal is valid through June 12, 2003 ”, then that proposal is hanging out there indefinitely.

The point of this section is to help you understand that if you aren’t careful what you say, you could increase your liability beyond what you intend. And that’s no fun. Trust me on this one; I’ve been there.

Finding the Right Balance
Sometimes it can be a challenge to find the right balance between covering yourself legally and saying what you need to say to make the sale. After all, a sales proposal is primarily a sales document, not a legal document. It is intended to sell something, not document every last term of the deal. On the other hand, it is a document with legal implications; if you pay no attention to how it is written, you could be obligating yourself to provide something that you can’t deliver—or can’t afford to deliver.

The way I like to handle this is by doing two things. First, be very careful what you write in the body of the proposal, then have someone else review it just to make sure you aren’t promising more than you can deliver. Most salespeople don’t intentionally make things up, but in our exuberance about what we’re selling, we are sometimes known to stretch the truth. In a proposal, though, accuracy matters, so tone down your exuberance and paint a clear and accurate picture.

Second—and this is the most important—attach your contract at the end of the proposal, then include language in your proposal that says something like this:

"To accept this proposal, sign the attached agreement and return it to us by August 7, 2004."

Doing it this way, you are basically saying, “If you want to accept this offer, then there is only one way to do it, by signing the attached agreement.” So in other words, you’re doing exactly what those commercials are doing—you’re putting stipulations and conditions on the offer.

Organizing your proposal this way solves a number of problems, and offers a number of advantages. First, since your attorney drafts the agreement, you can be reasonably sure the agreement doesn’t promise anything that you can’t deliver.

Second, most agreements include an Entire Agreement clause that says something like this: “this agreement is the entire agreement, and anything else we said or promised before this doesn’t count.” So if in your exuberance to sell your product or service you promise something in your proposal that could be misinterpreted, then you’re better covered than you otherwise would be because your contract says, “unless it is in the contract, it isn’t a part of this deal.”

Third, the statement clearly says that the offer is only valid through a certain date, so no one is going to be able to come back three years from now and expect you to honor pricing that is three years old.

Your Contract
The contract that you use should not be an integrated part of your proposal; rather, it should be attached to the back of your proposal in its own Appendix section. The biggest reason for attaching a contract rather than integrating the contract into the proposal is that having a contract in the body of your proposal will detract from the argument that you are building.

If you have a contract, great. If you don’t have a contract, though, you don’t necessarily need one. A simple letter of agreement that the customer has to sign will often do the trick just as well. Of course, that’s between you and your lawyer to decide.

Get Your Own Attorney
Here comes the disclaimer. To get the full effect, you have to read it very quickly like they do at the end of those radio commercials. Ready? Take a deep breath…now read!

Remember that I am a proposal writer, not a lawyer. Whenever you deal with anything that involves contracts, you should be speaking with a lawyer who understands that you are developing a sales document that has legal implications. This does not mean you should allow your attorney to turn your sales proposal in to a contract, but it does mean you should be working with a trained legal professional who can help you make an informed decision about the best way for you to approach proposals and contracting.

Dave Seibert
President
The Seibert Group, Inc.
http://www.persuasionselling.com
dseibert@persuasionselling.com
513-598-4647