A business settles and finalizes its deals with contracts. These are the written documents that represent a business’s risk management and are signed to prevent future business litigation. Contracts are used for deals like new partnerships, confidentiality agreements, shareholders agreements and customer contracts. In more simple terms, a contract is an agreement to do something in return for something else. Written contracts are the basis for trust. They serve to completely communicate the expectations of both parties so there is no room left for misinterpretation. A verbal contract is not enough protection, how would you prove that a contract even existed?
The idea of contracts can be intimidating. A lot of written contracts involve confusing legal jargon, and because of this many businesses will unfortunately skip this very important step. This may leave the business vulnerable, and open to risk. But contracts don’t have to be so complex, and sometimes the best ones are written in a simple and understandable fashion. Just because the contract uses plain English, doesn’t make it less valid.
As stated earlier, a contract is an agreement between parties. And in order for it to be valid most only need two elements. First, all parties have to be in agreement of the offer, like catering services for money. Secondly, the value must be set and exchanged, in this case let’s say it’s $3,000 for catering an event. When these terms have been written down, agreed to and signed by both parties there is a binding agreement and legal obligation. If the agreement is not fulfilled, one or both parties may face legal consequences.
Some contracts require more planning and coverage. The important thing when writing contracts is to make sure there are no blurred lines. At a minimum a contract should have these guidelines:
- All parties must agree on the offer and major issues of the offer
- The offer must be accepted by both parties
- Use clear and specific terms.
- Make sure names and business names are accurate
- Keep a consistent tone and use of grammar
- Define important terms
- Avoid complexity and ambiguity
- Number the pages
- Proofread carefully
- All parties must sign and date
It’s wise to use legal agreements simply because it will protect your business. How a contract is prepared is very important. Be aware, a poorly written contract can leave you exposed to unwanted liability. Your business is important to you and you’ve built something of value, so why risk damaging that? Don’t neglect the basics; the last thing you want is to fall behind because claims have been made against you. An experienced attorney can help you avoid such mistakes by helping you write careful, accurate contracts. The lawyers at Fisher Stark will review your business goals and help you draft strong contracts for your legal requirements, liability issues and enforcement potential.
Last updated 7/5/2015
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