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Square

What's the difference between a signed receipt and a signed contract?

MYTH: “My customer signed the receipt, which means they accepted the terms of our agreement.”

 

TRUTH: A signed receipt is NOT the same thing as a signed contract...

 

When a customer signs a Square receipt, they agree to pay that amount at that moment in time. But what happens if that transaction is a deposit on a larger project, and your customer gets buyer’s remorse or decides to cancel? How can you best protect your business from unexpected (or even unintentional) contract breaches?

 

Let’s say you sell custom wedding gowns, and require a 50% non-refundable deposit. You buy materials, start making the dress, and then your customer calls you to say the wedding is off and since they don’t need a gown anymore, they’d like a refund. You explain you’ve already spent the deposit on materials. So your customer contacts their bank and says, “I cancelled my order, but the seller is refusing to give me my money back.”

 

This is where a signed contract becomes so important: your customer’s bank will require proof that the customer agreed to and understood the terms of your agreement.

 

Including the sales policy on your receipt or incorporating a contract that covers all of your sales terms with your transaction process can significantly increase your chances of winning a dispute. Having your customers agree and sign to acknowledge a clear policy can also discourage them from initiating a dispute they know they will lose.

 

This doesn’t just apply to retail sellers; the same best practices hold true if you offer a service. It’s also recommended that your customer sign to acknowledge that the job was completed. A contract should always be discussed with a customer prior to accepting a credit card payment, and should be reviewed and signed by both parties.

 

In short, while the signature on a sales receipt proves to the bank that the payment was authorized by the cardholder, it does not prove that the cardholder was aware of and agreed to all of your terms. Square has a contract template tool* that allows businesses to customize contracts help you and your customers stay on the same page.

 

You can learn more about payment disputes by visiting the Support Center and reading our Payment Disputes Walkthrough.

 

*We’re glad to offer you tools to help improve your business. But it’s important to note that Square is not a law firm and this does not constitute legal advice. Square provides these templates to individuals who choose to prepare their own contractual documents for their private use. If you need legal advice as to the accuracy, sufficiency, or enforceability of specific contract terms, you should consult with a licensed attorney.

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