Whenever doing business with another company or individual, it is important to get the agreement in writing. Having a written contract will help prevent miscommunication, and also give you recourse to the law in the event that the other party does not live up to their side of the deal. Even if you are doing business with a friend or someone else you trust, it is always best to have a solid business contract in place before moving forward.
When writing a contract, you need to make sure you cover all your bases to avoid problems. The following six foundations should be addressed in every business contract you sign:
- Properly Identify Parties – When you are writing a legal document, you need to make sure you use the legal names of everyone involved. This typically means the full name of all parties, plus the legal name of the businesses that are involved. It’s important that you sign your contracts as a representative of your business, NOT as an individual.
- Identify All Details – A good rule of thumb is to assume that if something is not written in the contract, it is not required. List all the specific requirements for each party so it is very clear what is expected of everyone involved. No matter how big or small, it should be written into the body of the contract.
- Clearly Describe Payment Requirements – Most contract disputes can be boiled down to a disagreement about money. This is why all payment obligations need to be precisely laid out. This includes information about who has to pay, how much they have to pay, when the payments need to be made, and any other relevant details.
- Clearly Communicate Instructions for Terminating Contract – After reading the contract it should be clear when the agreement expires. There should typically also be instructions for what one must do in order to get out of the contract early (if it is even possible).
- Adopt Dispute Resolution Strategies – While most business contracts are executed without a problem, it is always best to plan for the worst. Agree on some type of conflict resolution process ahead of time, and put it in the contract.
- Choose the Governing State – If you are entering a contract with a party across state lines, make sure you agree on which state will act as the governing authority. Laws in Florida may be different than another state, so it is best to know what you may be facing in the event of a disagreement.
When executed properly, a binding business contract will help ensure all parties are protected throughout the process. If you need help writing a contract, or if you have questions about your existing contracts, we’d be happy to help you answer them!