ARTICLE REQUEST: online/distance business basics
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ARTICLE REQUEST: online/distance business basics
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Posted on Thu Jun 30, 2011 10:10 pm
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how are terms negotiated and cemented online? is the email set enough? do you need faxed contracts?

does anyone know about this kind of thing? i have no idea where to start and i feel like it's a place where we have an information gap considering how many business whelps we have around here..

anyone? anyone?


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Posted on Thu Jun 30, 2011 10:28 pm
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I fail miserably on this subject... and I have a business degree. Rolling Eyes
I sent some jewelry to a woman that my mother-in-law went to highschool with. She has a shop in the French Quarter of New Orleans. At least she did, I have no idea if it's still there, if any of my jewelry has sold, if she ran off with it... That's my fault really. GET EVERYTHING IN WRITING. EVERYTHING! Sorry for the yelling, but, it seems people don't feel any particular need to be ethical if they can't see you face to face. For me, it's been a crapshoot.


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Posted on Thu Jun 30, 2011 11:14 pm
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My rule is, that any business that cannot be finished on the spot should be 'set in stone' by making a written contract - in paper, or validable electronic form, nowadays.

Directly finishable deals (by exchanging goods and cash and 'finisse est') usually does not mandatory need a written contract, as long as common laws are followed - just a bill in paper or validable electronic form suffices, so you don't run into problems with tax office. And now, in the age of online business with paypaling cash, I count these deals to the directly finishable ones - full payment first, and goods in return. But any partial prepay, send goods, get remainder payment belongs to the contract-worthy deals.

Following these rules I never went wrong. And if I was in doubt, I preferred to produce an additional piece of paper - if my potential business partner insisted on NOT leaving a paper trail, I usually opted for abandoning such a deal...

-ZiLi-


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Posted on Fri Jul 01, 2011 1:06 am
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I lack a fair deal of experience when it comes to written agreements. Mostly due to painful lessons in the past that no matter what was signed on paper made little difference. What I mean by that is unless you have a solid legal grasp of the laws in the markets you are dealing with you find you can't contract against existing laws. Both parties may be unaware of the negative(or positives depending on the side) until they are in a position of conflict.

Any past agreement I have attempted dealt with consignment situations. Wholesale transactions have always been quite simple and just required appropriate paper trail and insurance. I have yet to make advanced commitments to a retailer that forced me to live up to a time line. All deals were for available stock or pieces commissioned with an open time frame to complete.

Consignment is where I have been burned and now avoid accept only very few situations. It is very hard to draft an agreement with a vendor that in the end forces them to be fully financially responsible for stock in their possession. In many places no matter what you agree on they can still avoid liability for theft of items in their establishments, items damaged by the public, and the not uncommon bankruptcy of their business.

Consignment also requires a greater paper trail, time on the part of the mailler to track stock in multiple places, and maintaining higher levels of stock that cannot be sold using other methods while they sit in someones store. The few places I do consign with are gift shops associated with government/municipal run tourist sites/galleries/attractions. They are more solid, have been around longer then myself, and also have invested in significantly more stock security then most private businesses.


The short of it is I avoid situations that require agreements beyond receipt of payment and shipping expectations.



Joined: November 16, 2009
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Posted on Fri Jul 01, 2011 7:28 am
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Keeping it simple should be rule number one. For all I've made (not wholesale, really) it's been:
1) for materials, payment up front, rest after I've shipped
2) shipping with insurance (or any kind of traceable method)
3) For what ever happens in the receiving end with the merchandise is not my problem. If something is broken, I can fix it (with a price), but I am not responsible for anything that happens a hundred kilometers away from me, so I'm not the one who pays for the stolen/damaged goods.
4) No, I'm not going to make you/your niece/girlfriend/wife/husband anything for free, since we're such good business partners.
5) If through the correspondence with the dealer, he/she behaves shady (yells, is demeaning, complains how it's all difficult, argues about taxes or outright lies about legalities) back away. This seems to be a good indication of a person who thinks selling jewelry is a no lose business, that is going to make him a millionaire.


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Joined: June 22, 2011
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Posted on Fri Jul 01, 2011 2:29 pm
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This is a GREAT topic. As you know, I am currently seeking to do business with some of you for my store. Frankly, this is ALOT different than general purchasing for me as well.
I beleive the best route for anyone in your possition is to sell what you have "in stock" and sell it ONLY pre-paid. Seems there are a few people here that have websites, and may have some GREAT insight, and I may resort to ordering directly from them to establish a good relationship and trust. I do however want some things that my talent is FAR from and ISN'T jewelry, and such need to figure out a good system for buying some of these.
I do feel for your position, (me being the purchaser) your comfort level is FIRST AND FORMOST, and if you are established and can prove worthy of delivery, then why would a buyer NOT pre-pay for the goods?
I can tell you first hand, ANYONE trying to get your goods without any payment or only partial payment, is probly a fraud. As well as attempting to use some weird payment type. CASH IS KING, and PAY PAL is awsome as well, and easy to use. Checks? I dont like to accept them as a Business owner, so I would NEVER ask you to take one from me. If you do, for some reason, take one from somebody, MAKSE SURE it is a REAL CHECK FROM A REAL BANK and it clears BEFORE you send ANYTHING to the recipient. I hope to show you that not every business person is out to screw you or take advantage of you. It is YOUR hard work, get rewarded for it, and BE SMART!


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Joined: December 22, 2007
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Posted on Fri Jul 01, 2011 5:00 pm
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If I read chao's question correctly, he is asking about business dealings with people you are not in direct contact with, such as online or through other electronic means. Therefore, the following very long post is not meant to specifically address direct business transactions, even though some of it does apply.

You cannot expect a written contract to be a guarantee that someone won't breach an agreement. That's not the purpose of a written contract. Contracts come into play if/when communication between parties breaks down, one of the parties claims that the contract was breached, and that party needs to prove it to the satisfaction of a judge in a court of law in order to enforce it. A written contract is your proof to a judge of what the terms of the contract are and whether all parties agreed to those terms (they call this "a meeting of the minds" in legalese.) Then it's up to the judge to decide how the contract will be enforced. Doing business without written contracts is foolish and will eventually cause you problems.

In the US, sales contracts between people in differing states are legal and enforceable. Certain things won't be enforceable, such as contracting to deal with goods that are controlled (like alcohol) or illegal (like heroin). But since we are talking about selling chainmaille, and chainmaille is not illegal to sell or trade in the US, you are fine. Even if the contract contains an illegal clause (for instance, you write something in there where you are trying to scam the government out of income taxes), that does not automatically negate the entire contract. (Doing so will most assuredly not put the judge in a good mood, so I recommend you not do that.) The judge can still enforce the rest of the contract, effectively ignoring the illegal part and holding the parties responsible for the rest of the agreement. Business law and contract law are different in other countries. However, they are very similar in Canada and Britain (and some other countries) because they originated from the same basic common law. But there are some differences that contracting parties are responsible for knowing before entering into them. Do your research.

Contracts must have a minimum of three things to be enforceable in court.
1. Mutual consent ("a meeting of the minds") - both parties understand what the contract covers.
1. An offer and an acceptance of that offer.
2. Mutual consideration - the exchange of something that has value, such as money for goods, or goods for goods.

The details of a contract are ALWAYS negotiable. Just because someone draws up a contract and hands it to you, that doesn't mean you have to sign it. You can always negotiate the details. If someone is unwilling to negotiate, and you are not happy with the terms of the contract, don't sign it. Do business with someone else.

You don't have to be a lawyer to write a contract that is enforceable. Don't attempt to use "legalese". Write it clearly and specifically. Don't use terms like "in a timely manner" or "where ever possible". They are meaningless. Instead, say things like "within 30 days" or "at all times". Don't leave things open-ended or subject to wild interpretation.

As far as consignment contracts with shops that you cannot physically keep track of goes, some things to consider. This is by no means comprehensive.

1. Don't exchange goods until you have a contract that is signed by the retail shop owner in your hot little hands. If you do, it will bite you in the butt later. Mailing a signed contract is not difficult, time consuming, or expensive. Insist on it. A written contract will not protect you from a breach. However, a written contract is the only tangible proof you have of an agreement when you are forced to sue for breach of contract and you are standing in front of a judge asking for enforcement.

2. Take detailed pictures of all items that you release to a shop. Write a detailed description of each item. Insist on an email from the shop that they received all the items and that they arrived undamaged. Archive all email and voice mail traffic for when you need to prove in court that you upheld your end of the contract.

3. You need to know what percentage of the sales price the shop is taking in commission. You need to know if they are charging any other fees ("administration fees", "bookkeeping fees", etc.) Specify that if the fee is not written into the contract, you are not responsible for it. Specify that the shop is responsible for paying any state taxes owed on the sale. You also need to know what they set as the sales price for each item. If they plan on selling your items for less than you need in order to make a profit, well then, that's a deal breaker. You also need to try to protect yourself from the possibility of them selling the item for more than they tell you they sold it for, and cheating you out of your percentage of the sale. This is very important when you cannot physically walk into the store and check to see what the price tag actually says.

4. Set a time limit on how long the items will remain in the store unsold. Be specific. Once that time period is up and the item has not sold, you need to either get the item back, or renegotiate the contract. Don't leave this part open. You will leave yourself very vulnerable to never getting the item back. Remember, "in a timely manner" is meaningless. "In six months from the date of receipt" is specific and enforceable in court.

5. Specify how you are to receive payment, and how long the shop has after the sale of the item to pay you. Will it be a check drawn on the shop's business account (familiarize yourself with the acronym DBA. It stands for "doing business as"), with the name of the payee specified? Will it be through PayPal? Will you give them 30 days from the date of sale? Say so in the contract. Specifically.

6. One of the reasons the shop is taking a percentage of your sales is that they are taking on the responsibilities of running a shop and you are not. You get a place to sell your goods, but you don't have to worry about renting space, hiring employees, displaying the goods, security and anti-theft, paying the light bill, paying the insurance premiums, etc. I recommend that, because you have absolutely no control over missing/stolen/lost/damaged items, you write into the contract that the shop is responsible for any missing/stolen/lost/damaged items. If the item is not sold within the agreed upon time and they cannot or will not return the item to you, then specify in the contract that the shop owes you the commission on that item. The items you have in their shop should be protected just like everything else in their shop. A responsible store owner has insurance. Don't do business with a store owner who balks at being responsible for this. If the item is returned damaged (you have a picture of what the item looked like when you sent it, and an email saying the shop received the item undamaged, right?), then specify in the contract exactly how that will be handled. For instance, if the item is returned damaged, you will assess the cost of repairing the item, if it can be repaired, and the store is responsible for paying that amount to you.

7. If the shop goes out of business or files for bankruptcy, yes, you still have the contract. However, you are most likely in the back of a very long line of people who are demanding to get their money back. In all likelihood, the money will have all been passed out by the time they get to you and you will be out of luck. Unfortunately, this is not uncommon.

I'm sure I have forgotten something. I'm not a lawyer. This isn't comprehensive. Blah, blah, blah. Again, GET EVERYTHING IN WRITING! If you are going to do business with people, you have to be a grown-up about it and protect yourself. If you do business long enough, it is no longer a matter of if, but when someone will breach a contract. The only person who will take the time to protect you (aside from paying a lawyer) and get the contract enforced, is you. And it has been my experience that if people can't see you, they sometimes feel more justified in taking advantage of you.


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Joined: August 30, 2008
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Posted on Sat Jul 23, 2011 8:10 am
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lorraine wrote:
If I read chao's question correctly, he is asking about business dealings with people you are not in direct contact with, such as online or through other electronic means. Therefore, the following very long post is not meant to specifically address direct business transactions, even though some of it does apply.

You cannot expect a written contract to be a

*snip*


*cough* Article *cough*


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Joined: December 22, 2007
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Posted on Mon Jul 25, 2011 6:20 pm
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Contracts and Selling Chainmaille

TADA! Very Happy


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