Every business owner needs to know about contracts and agreements; they are all part of running a business. Unless you are highly trained in the matter, choosing commercial lawyers to draft them or at least read them through will ensure that the contracts are legal and fair and keep you out of trouble. Here are some tips to make good business contracts.
- Very often, an oral agreement is made when the situation is a simple one. However, even though in some cases an oral agreement is legal, it is rarely enforceable in a court of law. And in some cases such an agreement is not legal. It is far better to get the agreement in writing so both parties know where they stand.
- Keeping it simple is the best way forward. Agreements don’t need to contain a lot of legal jargon that makes them difficult to read. However, they do need to cover everything. Make sure the paragraphs have numbered headings to help people understand what they are about.
- Deal with management when getting an agreement. A person with a vested interest in the business will be more likely to ensure the agreement is not only fair, but adhered to by his employees.
- Use the correct legal names of the parties to the agreement as well as the correct legal names of the businesses, including the Inc or Ltd suffix on the end. If this is not correct, you will have no legal recourse if things go wrong.
- Details are an essential part of any solid contract or agreement. If anything has been left out, it can be added afterwards in handwriting, but both you and the other party have to initial it for it to become part of the contract.
- Money is often an issue that sees many disagreements, so it is important to spell out every detail about who pays whom, when and how much. Dates should always be included. Also list the method of payment and what installments if any, there will be.
- Even though there is a contract, things can still go wrong and you might want to terminate it. The reasons for termination should be spelled out in the contract – e.g. constantly missing deadlines.
- Ways and means of handling disputes should be in the contract or agreement.
- When two businesses are in different states, it is essential to agree on the laws of only one when making a contract. Otherwise it can cause a lot of wrangling as the lawyers try to decide which state law should be in force.
- Make sure the other party does not divulge sensitive information to anyone else by adding a confidentiality clause to the contract.
