Making a Clear Contract

Good communication is key in any relationship. It is particularly important when dealing with parents in your child care business. Providing clear information is important whether you are discussing what activities the children participated in that day or the rates that you charge.

When establishing a contract, terms can be established either verbally or in writing. The biggest disadvantage of a verbal contract is that the terms can be misunderstood. The legal disadvantages of a verbal contract are that it can terminated immediately by either party and that all the parties must be in complete agreement at all times. These disadvantages make a verbal contract very difficult to work with and enforce. A verbal contract is enforceable in court but it would be extremely difficult to enforce it without another witness.

When the terms of the contract are written, the chances of misunderstanding are much less. Your expectations can be clearly written, such as pick-up times. A written contract can also explain any consequences of violating any terms, such as late fees. This creates a document that can then be referred to if there are questions regarding any of the terms. Any change to a written contract must be in writing. You can add an addendum to the contract or write out a new one. In either case make sure the parent signs it. If a change to your written contract is not put in writing, it can't be enforced.

A written contract also gives you the opportunity to discuss how you run your child care business. This discussion can reduce misunderstandings as you can answer any questions or discuss any concerns about the terms immediately with the parents. The combination of the discussion and the written document will help reduce misunderstandings between you and parents.

Reduce Misunderstandings

Have you ever given a parent a break and not enforced your late fee or some other term of your contract? If so, you should include the following language in your contract:

Failure to enforce any term or provision in this contract does not invalidate that provision, term, or any other provision or term of this contract. If you want to begin to enforce the contract term immediately, write an addendum to your contract, with the following language, have the parents sign it, and give them a copy:

Effective immediately, all terms of the contract signed on _______ (fill in date contract signed) will be enforced as written.

Another contract tip ─ Consider the following language:

Fees incurred due to returned or nonpayment of checks will be the sole responsibility of the parents.

Add or edit the following language to fit with your situation:

Any additional costs due to returned checks will be due within 3 days of notice to you and are subject to late payment fees.

For all of the contract language cited above, if you want to add any of the statements to your contract you can either rewrite your contract or draft an addendum, have your parents date and sign it, make a copy for the parents, and keep the original with the contract.

Contract Complications

The primary purpose of a contract is to communicate what is expected of both the parent and the provider. Do you have a contract? Does your contract address the following situations? 

  • The parent must give a two-week notice before terminating your services and must pay for this period whether or not the child is in attendance. It also states that the parent does not have to pay for a week of a provider's vacation. The parent gives her two-week termination notice on the Friday before the provider is to take her vacation. Must the parent pay for the next two weeks? 
  • There is a declared snow emergency. The parent does not bring her child to your business. Must the parent pay for this day? What if the provider told the parent not to bring her child because the provider was concerned about unsafe driving conditions? Should the parent pay for this day? 
  • There will be a two-week trial period during which time either the parent or provider can terminate without giving notice. The parent has paid for the last two weeks of care in advance. The provider terminates after the second day of care. Should the provider pay the parent back the two-week deposit?

There are no right or wrong answers to these situations. A provider can resolve them any way she sees fit in her contract. The following are some suggested ways to handle the above situations.   

  • The provider should not allow a parent to avoid paying for the last two weeks of care by giving notice before the provider takes her vacation. Add contract language that says that the parent must pay even if the provider is on vacation for any of the two-week notice period. 
  • Some provider contracts state that the provider will always be open, regardless of weather conditions and that parents must always pay. If a provider tells the parent not to drive, it is reasonable not to charge the parent for this day.
  •  If seems reasonable for the provider to refund the two-week deposit when the provider or the parent terminates during a trial period.

No contract can cover every single situation that may arise.  Do your best to address as many situations as you can that involve payment. If something comes up later that you had not anticipated, be as reasonable as possible in how you handle it.

Here are some other situations that providers have called us about over the past year and how we answered them.

My contract requires parents to give me a paid two-week notice. It also says parents don't have to pay for the week-long vacation I take each summer. One parent gave me notice the Friday before I took my vacation. Does the parent owe me for two weeks or one week?

Unfortunately, your contract contradicts itself in this situation so you will probably have a difficult time enforcing your two-week paid notice in court. You could try to explain the contradiction to the parent and come up with a compromise. Under your contract the parent clearly owes you for a one-week notice. Maybe you can ask the parent to pay for two days of the second week. Make sure to rewrite your contract to say that parents must pay for the two weeks of their notice period even if you are on vacation during this time. 

I gave a parent a three-week paid notice, under the terms of my contract. At that time I told the parent that they could leave early if they found care before this time was up, but we didn't put this in writing. Two days into the three weeks the parent found other care and wants to leave. Now I realize I don't want to lose so much money if I allow the parent to leave early. Can I enforce the three-week paid notice?  

Yes. Any change to a written contract must be in writing for it to be enforced. So your verbal agreement isn't enforceable by the parent because it conflicts with your written contract. If the parent has not paid you for the three weeks, she may not be happy about paying now since you went back on your word. Enforcing your contract in court would not be a sure thing, even though you are legally in the right, because sometimes judges side with parents. Before you make a generous offer to allow the parent to leave at any time, make sure you are fine with the potential loss of money if the parent decides to leave immediately. In the future you should require the parent to pay for the last three weeks in advance. Then you are in the stronger position to refund some of the money or not.

I require parents to pay me when I take a two-week vacation. One parent gave notice two months before my vacation. The parent had been with me for six months. I was counting on this parent to contribute toward my vacation. Since the parent was with me for half a year, can I now charge her for half of their rate for these two weeks of vacation?

No. Since your contract doesn't allow you to charge for vacation time if the parent isn't there when you take the vacation, you can't do this. You can change your contract to say that parents must pay a prorated amount of your vacation time if they leave your program before you take your vacation each year. I would not require the parent to pay this prorated amount if you terminate the parent before your vacation. Another way to deal with this is to increase your rate so that it covers your vacation time and then the parent won't have to pay during those weeks.

One of my families has joint custody of their child after their divorce. The father is allowed to pick up the child on Thursday and Friday. He pays for these two days and the mother pays for Monday through Wednesday. Now the father wants his new girlfriend to pick up the child. The mother is very upset about this and doesn't want me to allow anyone but the father to pick up the child. I don't like being in the middle of this dispute. What should I do? 

You are always in control of your business rules. You can tell parents that they both have to be in agreement about who is allowed to pick up the child each day, or you can say that each parent gets to decide who is allowed to pick up the child on their day. Since each parent is paying you separately it seems logical that each parent should get to decide who the backup person will be. In that case you would tell the mother that she doesn't have any say over what the father does. If the mother is unhappy about this her options are to try and change the mind of the father or terminate care.

What if the facts in this last situation were a little different? The mother paid for all the days, there was no separate contract with the father, and the father was asking the provider a lot of questions about the care of the child (hours the provider worked, paid holidays, and so on). The provider is concerned that the father is asking these questions to use them as ammunition against the mother. Does the provider have to answer these questions? 

No. Your business relationship is with the mother, not the father. Since the father has no contract with you, you are under no obligation to answer any questions. You can answer general questions about your rules, but since you know this might create problems for one of your clients, it's not a good idea to do so. Tell the father that he should ask the mother if he wants to know anything about your business.

Photo Credit: Donnie Ray Jones