If you are putting your signature on the dotted line for any contract, it is vital that the document is reasonable and legally-binding. Signing a contract that has major flaws can not only end up causing a disagreement, but your business may suffer. Every time you make a deal with someone, you have the chance to protect your business, yourself, and your partnerships by having a lawyer review the document for errors. A contract doesn’t have to be riddled with fancy legal terminology either. In fact, the more clear and simple the wordage, the better. In that way, a contract is easily understood by all with minimal to no confusion.
A business contract outlines a set of agreements between two or more parties that establishes a duty to one another. A contract is basically like the rules of a game a pair or group of people are about to play, and those who are confused may not have as good of a game. Similar to a contract, if all parties don’t fully know what their duty is, then they may fail to fulfill them.
If you are a business owner, no matter how large or small the company, there will come a time when you need to write a contract. Even well-intentioned business people may draft a contract with mistakes that could very well cause them to end up in litigation with another party. You may need a business contract when franchising, accepting work as freelancer or independent contractor, buying items, selling services, hiring a contractor, entering a joint venture or partnership, and more. Every business contract should have the following fundamentals:
- Date of the contract
- Names of parties involved
- Contract expiration dates
- Payment amounts
- Potential damages for breaching contract
The initial step in writing a business contract is to figure out who the parties are and the parameters of the deal to be exchanged. The physical document may be created by one party, however, an meeting should be had that includes all parties so each is given a chance to express their terms, wants, and needs before signing. This meeting allows an opportunity for potential disagreements to be worked through before signatures are provided, because once everyone signs, it’s set in stone. And if one or more parties breach their end of the agreement, this can lead to not only stress, but loss in profits as well.
As our business lawyer friends have seen before, people who have good intentions may enter contracts only to find that they are at odds about a term or expectation. By having a legal professional review the contract first, the best interest of all parties can be protected, increasing the chances of it all going well without issue.
