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  • What Should Church Leaders Know About Contracts?

    church leaders

    Many religious organizations operate much like for-profit businesses. Churches hire employees, order office supplies, linens and food, janitorial supplies and services, professional laundering and cleaning, construction needs, and much more. Church leaders may also frequently find themselves in a position requiring contracts as part of daily operations.

    Contracts are legally binding agreements between two parties detailing what is expected of both. For instance, the church may enter a contract with a construction company to build or repair a building on church grounds. This type of contract outlines the ministry’s offer for compensation for construction services and the acceptance of the contractor to carry out those duties to receive payment.

    What Should Be Included in a Contract?

    All parties entering into the agreement should be listed in the contract, including their titles, companies, and names, with a clear understanding of who has the authority to sign and enforce the contract.

    The purpose and scope of the contract and the parties’ qualifications to carry out the specifics of the agreement should be included as well. Be as precise and detailed as possible so that each party has a clear and definitive understand of what is expected.

    Include details of the services, such as what is being requested, who is responsible for carrying it out, where will the work take place, and equipment that is necessary. This is a key section of the contract and may be extensive, depending on the purpose of the agreement.

    In the case of multiple transactions, there should be a general understanding of payments by both parties. Also, ministries may benefit by including a clause stating that payment will not be made unless the church is satisfied with the service as well as the right to withhold payment if this satisfaction is not met. This likely should require detailing the term “satisfied,” with both parties agreeing to this definition.

    Knowing the length of the contract, whether it renews or expires, including appropriate dates and whether either party can terminate the contract early, is also important. Leadership should consider adding a force majeure clause that protects the church from being in breach of contract should something happen outside of its control but prevents the church from fulfilling its end of the contract.

    As with any agreement between two or more parties, contracts of all nature carry a certain amount of risk. Assign who is responsible and what they are responsible for should something go wrong during the term of the contract, such as personal injury or property damage.

    Depending on the needs of the church, confidentiality clauses may be a necessity, such as protecting the names of donors. Clearly define “confidential” in each instance, as it may differ from one contract to another.

    Contracts provide each party with the exact understanding of the responsibilities and expectations of each, helping to avoid miscommunication and misunderstanding. The aforementioned is by no means a complete list of what to include in the contract. Keep in mind that each will be different and require different elements based on the contract’s purpose, and the language should be tailored to the specific needs of your organization. Work out every angle, and try to anticipate any situation that may affect the agreement between each party.

    As contracts are enforceable by a court, they should be well-written with clear and precise language and include responsibilities should a disagreement or litigation arise in the future. Keep in mind that each contract will be different and require different elements, and the language should be tailored to the specific needs of your organization.

    Should Church Employees Have Contracts?

    Probably the most common church contracts will be with the organization and employees, although not all churches utilize them. In many instances, church leaders may assume contracts are not necessary based on a trust of the position, such as pastor.

    Employment contracts do not show a lack of trust between leadership and the employees, but they provide a clear understanding by each party of what is expected of the employee and the employer. Here are some points to consider in employee contracts:

    • Expectations: In contrast to most employment positions, religious organizations have higher moral, ethical, and theological expectations of their employees and how they interact with others. Unlike some for-profit organizations, these expectations may extend into the church employees’ personal lives to avoid public controversy or embarrassment for the church. A clear understanding of what is expected and theological positions should not distract from the church’s purpose and functions.
    • Duties: Specifically outlined job duties and what needs prioritizing are necessary in religious organizations, particularly those considered to be specific to certain positions in leadership. The position of pastor, for instance, typically holds many responsibilities that require prioritizing, such as funerals and weddings. Such expectations should be clearly stated up front in the employment contract.
    • Hours: There are few other professions with more inconsistent hours than that of ministry members. Crises and unplanned events can happen at any time, requiring additional work hours or pulling one away from other duties. For instance, funerals are rarely known ahead of time and frequently take place during weekends or weekday mornings, requiring pastors to rearrange their schedules and hours. Does your church grant the pastor the option to take those hours off during the following week, or is the pastor expected to be present whenever necessary, regardless of the number of hours? Such expectations of an employee’s time must be clearly specified in the contract to avoid confusion and conflict.

    Who Has Authorization to Represent the Church in Contracts?

    Churches frequently contract with service providers, vendors, employees, construction companies, financial institutions, licensing agencies, and more. Church leadership need to develop a clear understanding of who has authorization to represent the church, and those who sign contracts must have the legal authority to do so as well. Within the ministry, this may be intrinsic to the position the representative holds within the church.

    Determining this authority will be invaluable should a lawsuit arise in the future. If found that the signer did not have proper authority, the individual could be personally liable for the contract. Additionally, a signer could also be personally responsible if they do not reference the organization or their capacity as a representative. To avoid confusion and liability, the representative should always indicate the church’s name and their role within the church authorizing them as a representative. If there is doubt as to an individual’s authority, obtain clarification before signing.

    Do Contracts Protect the Church From Potential Risks?

    As with any legally binding agreements, contracts are not without risks and challenges. Religious organizations often have unique situations due to the nature of their work and nonprofit status. Situations such as limited budgets and resources can compound this. Many religious organizations consult experienced church law attorneys to help assess the risks up front and work with religious leaders to develop strategies to address any challenges.

    Church Law Attorneys at Anchor Legal Group, PLLC Help Religious Institutions Prepare Proper Legal Contracts

    Our experienced church law attorneys at Anchor Legal Group, PLLC will help you develop comprehensive contracts, and we will provide legal representation for your religious institution. Call us at 757-LAW-0000 or contact us online to schedule an initial consultation. Located in Virginia Beach, we serve clients throughout Chesapeake, Norfolk, Suffolk, Portsmouth, Newport News, Hampton, and Eastern Shore. We also serve our clients throughout the United States through our network of associated attorneys.