One of the most important things to get right as a business owner is your contracts. Unfortunately, they are one of the things people most frequently get wrong. A well-written business contract could mean the difference between your company surviving a dispute and closing down because of one.
What should I put in my business contract?
Here are some ways to increase the effectiveness of your contract:
- Make it fair: You want a contract to protect you. However, it also needs to protect the other party. Judges can sometimes overturn an agreement in a dispute if they feel it unfairly advantages one side.
- Create an exit strategy: Many business relationships go sour or do not work as well as hoped. By planning what happens when one of you wants to end it, you can reduce conflict should you need to terminate your relationship.
- Set time limits: Think about a rental contract. Landlords typically stipulate the deal is valid for a year. Circumstances will change whatever type of contract you are making. Define when or on what basis you can alter prices, be it for rent or the cost of supplies. Make payment schedules clear and stipulate the process if one party fails to meet payment deadlines.
- Get it checked: Ensure you have it reviewed by an attorney. Contracts are legally binding documents. A small error you make when drafting it could have costly consequences.
Take time to revise any existing business contracts you have. A lot has changed in the world during the last year. It might be time to update your agreements to reflect this. It is better to clear things up now rather than wait until a dispute arises.