Contracts are a necessary part of doing business. Whether you’re a fledgling startup or a multi-million-dollar corporation, you need contracts whenever you enter into an agreement with another individual or company or welcome new employees aboard.
However, not every new business owner (or experienced manager, for that matter) knows the best practices for business contracts and how to ensure they’re compiled with your best interests taking precedence. If you’re about to put together a contract for an important business deal, keep the following tips in mind.
Rely on Experts
You might be an expert in many parts of your business, but that doesn’t mean you can breeze through the intricacies of commercial law. If you’re about to sign an important contract or create one for a critical business deal, enlist the services of local commercial lawyers to help.
Commercial lawyers can handle all manner of contractual matters and make sure the terms are in your company’s best interests. You can also rely on them for other services relating to property transfer, consumer law, franchising, commercial real estate, and more.
Be Clear and Concise
There’s no denying that the average business contract can be confusing. They often include an abundance of unfamiliar terms and phrases you don’t see in everyday life. However, it doesn’t have to be this way. In fact, it shouldn’t be.
Despite their unfamiliarity, business contracts have the potential to be clear and concise for all involved. Indeed, it’s vital that they are clear and concise if you want to reduce the risk of disputes and ambiguity. Talk to your commercial lawyer about the best way to create a straightforward contract that all parties involved will understand.
Include Standard Contract Aspects
The average business will create and sign numerous contracts to achieve various business goals. While all legal agreements are different, they generally include similarities that are helpful to remember.
At a minimum, you should ensure that your contracts include:
- The names and roles of all people involved to make expectations clear;
- The start and end dates of the arrangement;
- Any financial terms, such as payment amounts and their due dates;
- The terms of a termination;
- How to handle disputes, such as a breach of contract.
Invest in Contract Management Software
The average small business might just print off a contract and file it away in a drawer until they need to review it at a later date. However, when multiple contracts require updating and negotiating regularly, this approach is not overly efficient or safe.
Enjoy better organization and control by investing in contract management software. Such software digitizes and stores contracts in one key location that all relevant people can access and update.
Go into Detail
The particulars of a contract or agreement should never be inferred. This means you should never assume that the parties involved in the contract know what you mean without explicitly including the details in the contract.
Always go into great detail regarding the terms of your agreement, especially where money is concerned. For example, if money must change hands, ensure you include:
- How much money must be paid;
- The payment frequency;
- The agreed-upon payment method;
- Late payment costs;
- Auto-renewal terms and dates.
Business contracts can make or break relationships and can even be responsible for businesses failing or incurring penalties and fines. By being aware of some of the most critical business contract practices, you can ensure all the agreements you create and sign are fit for purpose and suitable for your current and future needs.