A Guide to Business Contracts

Throughout the lifespan of your business, you'll more than likely have to sign at least one contract. You may even need to write a few. Before you do either, it helps to know how to devise and negotiate them. 

Importance of a Contract

Simply put, contracts are agreements between two parties. If a person should happen to breach the contract, legal action can be taken. A contract protects both parties and your business. Without a contract, you have minimal ground to stand on if someone doesn't live up to their responsibilities, such as paying you. 

Drafting a Contract 

Your contract should state the rights of each party, so it's understandable. Be certain to go into detail so there are no gray areas. For instance, any unclear terms need to be defined within the contract. Include details like when one of the parties may terminate the contract. You might want to cover how to handle disputes if one should arise during the contract term. For example, let's say one party is in a breach of contract. The contract should note a course of action, such as if you'll go to court and who will pay for lawyer fees if you plan to go to court. 

Negotiating a Contract 

A contract must work for both parties, which requires a negotiation phase before you draft the final version. Know your approach before you get to the meeting. For example, are you going to get the other party to agree with all the terms, or would you rather make the contract mutually beneficial for you and the other party? Come prepared with research to back up why your terms need to remain. You should also make sure you're negotiating with the person who's responsible or able to negotiate on the other party's behalf. 

Don't rush this part of the contract phase. These terms are going to remain until the contract is up. During the negotiation phase, take one section of the document at a time. If you're struggling to agree, move to the next section and revisit that one once you've had time to think. 

Drafting Contracts With the Right Tools

You don't need a lawyer to draft a contract. You may complete the entire process yourself, even if you're not an expert with legal jargon. With that being said, it helps to use a tool that allows you to open and edit contracts easily. You may also want the tool to provide the option to copy a section of a current contract and implement it into a new contract. For this, use this online tool to extract PDF pages which allows you to create a new document in the same format as that text. 

Protect Your Business With Contracts

Anytime you work with another person, protect your business by having a contract. Use the right tools and make sure you take your time to come to an agreement that works for both parties. 

Visit your local chamber of commerce today. It can be an excellent place to learn more about building a business and can be a way to network and find vendors.