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Business environments are filled with agreements between corporations, businesses or individuals. Oral contracts are not binding. However, a written contract is always used. A contract is one of the most important documents you will encounter when you start a business. Every transaction or deal you enter, you make a contract to document the agreement.
Drafting formal business agreements takes time. Businesses need to create a reasonable contract that contains all the details of what the parties agreed. The process is meticulous to avoid any errors that could affect the business’ future dealings.
What to Consider When Creating Business Contracts
Without a legal business contract, businesses may encounter problems in the long run. You can apply these essential tips when you draft your agreement.
The Business Contract Must Be in Writing
Business contracts must be in print.Written business contracts provide both parties with a proof that they agreed on something. It is also critical to create a written agreement because:
People forget. Regardless of age, people often fail to remember their obligations when they are caught up in their daily activities. It also applies to businesses. Since you are dealing with fellow business owners, a written contract is needed to remind you of what you agreed.
People misunderstand. Misunderstandings arise when one or both parties misinterpret what the other said. It is better to write the contract, so all the details are explained.
People can lie. People are capable of lying, especially when put in a tight spot. Writing a legal business contract prevents both parties from deceiving each other.
Avoid Difficult Business Jargon
Keep your contract simple. Including difficult business, terminologies maybe confusing. Ensure that your contract is brief, yet precise. Include simple words that are easy to understand.
Observe Your Format
Drafting a contract is more than just simply typing. You need to organize what you want to put into it. Create a format that is easy to understand. Your contract must have a flow and should be divided into sections. Avoid making an unorganized agreement as it may look unprofessional.
Draft and Review the Contract
Contracts are permanent and binding. Therefore, it is essential to evaluate the drafts you make before printing a final copy. You can follow these steps:
First draft. The first draft is when you initially create your contract. This phase is the stage when you type in all of your ideas. Make sure to add the necessary sections in the agreement.
Review. Once you are done with your draft, review it. Check for grammatical errors, lacking sections and misspelled words.
Revise. Revise your draft and correct the errors you saw in the first review. If there are missing texts or subsections in the contract, include them.
Review again. Again, review your revisions. It doesn’t matter how many more times you review and revise your contract. What matters is if the agreement contains all the details you need.
Finalize. Lastly, finalize the contract. Since business contracts are legal documents, you can consult your lawyer to see if it is enforceable and binding. If you do not have any more revisions, it is time for you to present it to the other party.
Indicate the Payment Obligations and Terms
It is also essential to include payment terms. If you offer services, you should add your:
Down payment requirement
Payment schedule – weekly, bi-monthly, monthly, or depending on your stipulation
Include Termination Clause
There are instances when the business deal turns sour, and both parties do not wish to continue anymore. There are also times when a business violated something in the agreement, which renders it null and void. Including a termination clause makes it easier for both parties to know what steps to do to end the deal.
Deal with the Right People
In business, it is crucial to speak with whoever is in charge. Talking with the right people allows you to explain your contract and business easily. If you speak with assistants, secretaries or junior officers, it takes time because they do not have the power to make decisions.
Speaking with the one in charge, the decision maker, saves you time to further discuss the contract. If you do not know who is in charge, you can ask the receptionist or someone in the office to direct you to him or her.
Legal business contracts are essential tools in running your business. These documents aid you in closing deals with other companies to help yours grow. They also serve as evidence in the case one of the parties breach the contract.
Aside from the things presented in this article, your business should not any workplace employment discrimination as this can put your business at risk. To know more about this topic, you can click here.
P.S. Special thanks to Anne McGee for sharing this material. Anne McGee has over 20 years of experience writing about law subjects where she hopes her knowledge can help the common reader understand law topics that may be of relevance to their daily lives. If she’s not reading a good book, then chances are Anne is jogging during her free time.