The Best Contract Tips For Business Owners
As a new business owner, you are faced with a myriad of responsibilities. From payroll to marketing to dealing with vendors and clients, you have to wear many hats. This is especially true if you are the owner of a small business. With these different interactions, you are probably creating and signing many different contracts.
The following guidelines will help you understand and create contracts that are enforceable and include easy to understand the language that will help all parties involved.
Make A Simple Contract
K.I. S.S is an acronym that stands for ‘Keep it Simple Stupid’. Disregarding the last part, this should be your objective when you are creating a contract for a vendor, employee, or client.
Despite what many legal experts believe, you do not have to include a lot of legalese in your contract to make it binding or enforceable. You can instead choose to keep the context of the contract simple by using short sentences that are concise and easy to understand.
easy to Understand
For example, you can number the headings of each paragraph in the contract so the reader will know in advance what type of information is included in the paragraph.
Make Sure Everything Is In Writing
“Even though the judicial systems in many jurisdictions recognise oral contracts as legally binding”, they can be difficult to enforce. Unfortunately, there are some situations when they may not be enforced at all.
As a business owner, any contract you are a party to should be in writing. This is true, even if the laws in your area do not require contracts to be in writing. When you have a written contract, there is less risk than an oral contract. The document that you have will clearly state each party’s obligations and rights in the event there is a disagreement or any confusion.
You may be surprised that this is one of the most common errors in written contracts. Business owners often get this information wrong; however, it is extremely important. The legal names of all parties involved should be in the contract so there is no mistake who is responsible for fulfilling the obligations of the contract. You will also know who you can hold legally responsible if something goes wrong.
For example, if you are in a contractual agreement with a business that is an LLC, it must be identified correctly in the contract. This means that all suffixes will also need to be included. In this case, the people who are signing the agreement are not legally responsible, the business is.
Enter Into Contracts With The Right People Never waste time trying to negotiate a contract agreement with a person who is not the decision maker. If you believe you are dealing with someone other than the boss or the decision maker, be polite but firm when you ask to speak to the person who is in charge.
The person you enter into a contract with should have the authority to bind the business into a contract with your company. The person should also have a vested interested in ensuring the business will be able to fulfill its part of the contract.
If you are dealing with a smaller business, this person may be the owner of the business. However, if you are dealing with a larger company, you may be dealing with the COO (Chief Operating Officer) or CEO (Chief Executive Order).
Be Sure Payment Requirements Are Specified
The contract should state which party is receiving payment, and when should the payment be made. You may even want to include how the payment should be made.
Money is often the catalyst that can create a contentious business arrangement even when a contract is in place. This is one reason why this part of the contract needs to be extremely detailed. Some of the details you may want to consider are:
• Will the payment be made in installments or when the contract or obligation is completed?• What are the payment dates?• What are the payment requirements?• What will be the method of payment?
Create A Way For Disputes To Be Resolved
Also, include in the contract how you and the other party will resolve any disputes if something goes wrong. For example, will you choose mediation or arbitration? A court is also an option, but it is a time-consuming and more expensive option.
These are some things that business owners should keep in mind when creating contracts. Never hesitate to ask your attorney look over any contract you draft to address any issues that are unclear.