Contract First, Practice Later? Why You’ve Got It Backwards
When a new business relationship begins, it’s tempting to grab a contract off the shelf, tweak a few names and dates, and call it a day. After all, the “real work” is about to start — the paperwork just needs to keep up. Right?
Or maybe you take a contract you’ve seen someone else use, and decide to change your business practices to comply with their terms. That makes sense, doesn’t it?
No — not quite.
A contract shouldn’t trail behind the deal like an afterthought. But it also shouldn’t reshape the deal without giving that deal any thought. A well-drafted contract should define and support the arrangement — tailored to how the service will actually be delivered, who will deliver it, how value will be created, and how risk will be managed.
Otherwise, you risk ending up with a document that’s legally tidy but practically unworkable — or worse, a source of confusion and liability down the track.
Here’s why the contract should follow the practice, not force it.
🎯 1. The Contract Should Reflect the Practice — Not Dictate It
Contract drafting isn’t an exercise in creative writing. It’s a legal mirror held up to your actual business model.
If the agreement assumes a formal signoff process but you operate with agile, iterative sprints — you’re going to breach your own contract just by doing business as usual.
If the contract says “transfer of IP on full payment” but payment is milestone-based and you’ve already handed over the work — you’ve just created ambiguity around ownership.
Rule of thumb: don’t draft a contract until you understand exactly how the service will be performed — including team structure, communication cadence, approvals, deliverables, timing and client involvement.
🧱 2. Contracts Are Guardrails, Not Strangleholds
A good contract provides structure, accountability and fallback positions — but it should never get in the way of the commercial reality.
That means building in flexibility where needed:
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SaaS development that permits user testing before signoff
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Design services that include concept revisions without resetting timelines
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Joint R&D where IP rights reflect actual contribution, not just billing rates
When the contract forces an artificial or overly rigid process, it can delay projects, sour relationships and ultimately undermine the client’s goals.
⚠️ 3. Misalignment Can Lead to Legal and Commercial Risk
If your practice and your paperwork aren’t aligned, it can backfire — fast:
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You might lose leverage in a dispute because your contractual obligations were never realistically achievable.
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You could accidentally license more than intended, or assign rights prematurely.
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Your service model may breach regulatory obligations, especially around data handling, privacy, or consumer guarantees.
And in litigation, courts often look past the black-letter terms to how the parties actually behaved. A contract that doesn’t match conduct can be more of a liability than a safeguard.
🛠️ 4. Tips for Getting it Right
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Start with a reality check. Understand your own processes — or your supplier’s — before putting pen to paper.
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Workshop the workflow. Map out the actual steps of delivery and make sure your contract reflects them.
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Speak human. Avoid boilerplate that doesn’t fit your practice. Contracts should be clear, not cryptic.
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Review regularly. As your service model evolves, your contracts should too.
🚫 Don’t Retrofit. Design Fit-For-Purpose.
The best contracts aren’t theoretical constructs — they’re practical frameworks. They don’t try to reinvent how you work. They protect how you actually do business.
So don’t write the contract first and force the practice to conform.
Understand the practice. Then draft the contract to match.
The NSW Court of Appeal has handed down a sharp reminder that contract clauses don’t enforce themselves — and that if you leave key blanks unfilled in a standard form agreement, you may be left with no recourse when things go sideways.