A business contract is a legal agreement between two or more parties that specifies a shared objective. When conducted in the appropriate manner, business contracts are a great way for two companies to work together and gain benefits through the purchase or sale of products and services. Although various types of business contracts exist, and there are a few key factors to consider that will aid you in the process of drafting a successful business contract.
Choosing the right form:
A written contract will assure your business safety from misinterpretation in the case that something goes wrong. Verbal contracts are increasingly difficult to interpret in court and may result in extreme complications for both parties involved, so be sure to have everything written down.
Less is more:
When deciding what to include when drafting a business contract be sure to keep it simple. The goal of the contract is to assure that both parties know and understand exactly what is expected of them; leave no room for interpretation, use common terminology and stick to the essentials.
The importance of detail in a business contract is crucial to the protection of your company. Keep in mind all of the possible situations that may arise and be certain to include the main details:
- Accurate identification of both parties
- Performance obligations of both parties
- Form of payment
- Specification of who is paying
- How much is being paid
- When and where payment will take place
- Agreed upon termination circumstances
- The state law in which the contract will apply to
Trust the business you are working with:
Nothing is more important than having a trusting relationship with the person(s) you are entering into a contract with. A good relationship will assure performance of the agreed upon obligations in the contract and rid your company of worry. If the individual being dealt with seems uncertain or hesitant, further investigation should be taken before agreement takes place.
Often times, you may want an attorney to review or assist in writing you company’s business contract before you sign. Learn more about how our business law team can help.
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