Entering into contracts is a crucial aspect of running a business. Whether you enter into an agreement with another company or have an employee sign a contract, you must give each contractual relationship careful consideration. If you do not follow strict procedures, and the relationship goes south, you may get stuck in legal trouble.
Each contract you sign should protect the interests of your organization. Here are some good strategies for creating contracts for your business.
1. Write it and sign it
Do not assume an oral agreement will suffice. Even if you are doing business with a family member or someone else you trust, you never know when things may go wrong. Without the contract in writing, it will be difficult to enforce any provisions of it. Having written documents is the best way to prove the terms of a contractual relationship. When all parties read and sign an agreement, any disputes become much easier to understand and resolve.
2. Be specific
A good rule of thumb for writing contracts is putting everything in as much detail as possible. Do not leave any room for misinterpretation or misunderstanding. For example, if you want to receive payment on the fifteenth of the month, write down the specific date instead of something like “mid-month.” The more thorough you are, the better.
3. Include a dispute resolution clause
While the goal is to avoid disputes at all costs, you must be ready for them to occur. The best way to do this is by including a section of the contract that spells out how you will handle disagreements. This clause may dictate whether you rely on mediation, arbitration or litigation when there is contention.
The goal of writing a contract is to create a document that achieves your goals while protecting your interests. Follow these guidelines whenever you enter into any agreement during the course of your business.