At some point in running a successful business, contracts must be signed. This could be with creditors, investors, partners, or clients who might need customized and specialized services. If they taught you right, a business contract is an agreement between two people or parties on a shared objective.
There are so many reasons why businessmen and women will sign contracts. In the long run, business contracts will serve as a record of commitment, they’ll act as a compliance requirement, and they’ll also help to increase business efficiency. Whatever your reasons are for signing a business contract, it will be important to first weigh your options.
Below are seven things to consider when making a business contract.
1. Put It In Writing
Gone are the days when contracts were made orally. At the time, oral agreements were legal and binding with the presence of a trusted witness. Today, however, and with the various changes in legal systems, such agreements will need to be enforced in court to strengthen the evidence.
To make the contract writing easier for you, the guys at hellobonsai.com/contract-templates suggest using contract templates. This way, you’ll have a structured document every time you need to make a contract with your business associates. It’s worth noting that written business contracts help to make legal interpretations much easier and in case of legal conflicts, you have evidence of the same.
2. Simplify The Contract Procedure
Keep your business contracts simple and clear. It’s a great idea to spend your day making a contract but let’s face it, there are other important matters to attend to. You have employees to manage, various financial obligations that need your attention, and not to forget valuable clients who need you.
It’s important to ensure that the contract will be easily understood by both parties. The parties need to know beforehand what’s expected of them.
3. Contract Termination
A legit business contract should have set-out rules under which the contract would be terminated. Human beings have the nature of falling out of an agreement. When one party fails to appear in the contract signing meeting, it can be assumed that they are unwilling to sign the contract.
This may lead to contract termination. It could also be that the specified terms in the contract are not adhered to, this will also lead to the termination of the contract.
4. The Contract’s Grace Period
The business contract is not an indefinite one and will not stay active forever. It has got to have both a beginning and an ending depending on the type of offers the two parties have laid on the table. The opening and closing dates of the contract should be part of a legitimate business contract.
The period of time the offer stays unlocked also matters. This needs to be stipulated in the contract. As a wise businessman, ensure to set reminders and notifications to notify you of the contract’s expiration. This will help to ensure that you’re never caught off-guard.
5. Payment Obligations
Most business contracts will have payment obligations. Money is always a very controversial issue and should be a comprehensive and specified part of the contract. It should include whether the payments will be paid in installments, cash, or in collateral. As earlier mentioned, the payment deadline should also be a consideration that both parties need to agree on.
6. Governing Laws
A healthy business contract should have an included clause that would state the law applications as pertaining to the particular business contract. The legal aspect of things will help when settling any conflicts arising when dissolving the contract.
One thing to note is that not all business contracts will end with a handshake. Some end in court and this is where you might need an attorney to help with your civil case. You must educate yourself on the various laws in your state that concern business contracts and how to amicably solve business contract conflicts.
7. Contract Signing
Last but not least, you have the contract sign that will act as your agreement. Both parties need to sign the contract and if possible, the inclusion of a neutral signature from a witness. Before signing the business contract, both parties must read between the lines just in case there are red flags or misspelled legal terms that need further clarification. It’s the reason why most if not all business contracts are signed before an experienced attorney.
As an entrepreneur, paying close attention to your business contracts is not only a requirement but a prerogative. At some point, it might require that you shake hands with the devil himself. But this doesn’t mean that you cave into his demands. The above pointers will help you in making sound business decisions before signing on the dotted lines.
If you are interested in even more business-related articles and information from us here at Bit Rebels, then we have a lot to choose from.