4 keys to an effective business contract

4 keys to an effective business contract

On Behalf of | May 25, 2022 | Business Law |

The contracts you create are vital to the success of your business. They can reduce the chance of problems, help resolve them if they occur, and protect you throughout. Yet they will not do any of those things unless they are properly written.

Not everything you should include in a contract is obvious. Here are some reminders of what you need to have:

Deadlines

When one party supplies services or goods to the other, make sure your timings are clear. Delays can cause significant problems for the party, who cannot proceed until they receive what they need from the other.

Consequences

Consider stipulating penalties for failing to fulfill promises on time or to the necessary quality.

How you will resolve problems

Expect there to be issues along the way. Setting out how you will deal with them from the start reduces the chance you end in litigation that benefits no one.

How you can end the relationship

If you are an easy-going type, you may assume that if one of you wants out, they just have to say so. Yet, it is easy to make business decisions banking on your contract remaining in place. For example, you secure a contract to supply 1,000 units a month and need to take on extra staff or move to larger premises to meet the demand. That looks like progress until the other party drops you, and you are left with too many staff or too large a space. Always define what period of notice a party must give to end the agreement.

Always get legal help when creating or signing business contracts. Overlooking something or misunderstanding contract text could create costly problems later.

Share This