For those of you who have a small business, then there’s no doubt that you’ll be interested in contacting possible business partners so that you can move ahead in the industry. Also, having a partner in the business industry gives you more areas for scope and opportunity.
However, that doesn’t mean one can enter into a business relationship straight away. There has to be a couple of terms and conditions regarding the partnership and it must all be placed within a single document. That document is what you would call a business contract and this article is going to teach you how to properly make one.
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How to Write a Business Contract
Simple business contracts are crucial to the relationships between companies and business partners. Contracts specify the terms of agreements, services, and even the products that those in the partnership exchange with one another. One of the main reason as to why you need to make one is because it has the ability to solve disputes misunderstandings by providing legal remedies should one member of the party decide not to hold up to their end of the agreement.
So if you want to be able to make a proper business contract, then here are the steps that you should take:
1. Begin With the Basic Information
The first thing that you should do is write the exact date in which you made the contract. This helps if one has to prove the date of the contract’s creation in situations where the information is needed, a good example being in court. Once that’s done, you must then write down the names of both businesses that wish to engage in a business relationship.
If you are contracting on behalf of a business, make sure to include both the business name and the names of the people who are anyone from the CEO, President, or even the director. Make sure that you write down the first and last name so that anyone who goes through the contract will know exactly who was involved. You may also see secrets for writing business contracts.
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2. Detail the Exchange of Items
You’ll need to have a detailed account as to what services and goods are to be exchanged by the two parties. Remember not to use legal terms as that will just make it that much harder for one to understand what the contract contains. Keep things simple and easy to understand. You may also see event contract templates.
Also, be concise in what’s being exchanged. It should explain what one business is offering and promising to deliver and what the other business agrees to pay or do in exchange.
If payments are to be made, then you’ll have to place the acceptable payment methods (cash, check, or credit card, for example) along with other pieces of information such as the amount of money that needs to be paid and the date in which the payments are to be expected.
And lastly, you’re going to have to provide a proper description of whatever products or services will be exchanged. This is to ensure that both members of the partnership have a general understanding of everything that’s going to be exchanged and so that they can check if whether or not they’re handing over and receiving exactly what they need. While providing the details, point out things such as the color, size, make, model, delivery date and anything else that can help identify what is to be exchanged. You may also see company contract templates.
If services are in consideration, indicate what services will be performed. You’ll need to specify who will be performing these services, for whom, when and where it’s going to take place, how long the service will last, and how much money it will take to provide it. You may also see advertising contract templates.
3. Consider Adding a Confidentiality Clause
Even you wouldn’t want your partner to share confidential information about your business with those who aren’t involved in the business relationship. And that’s exactly why you have to consider adding a confidentiality clause into your contract so that you can keep your business secrets safe from outsiders. This type of clause is not necessary when the other party to the contract will not be exposed to any secret information. You may also see management contract templates.
You may even want to consider having a non-compete clause that would prohibit someone from engaging in a similar service for a competitor for a given period after terminating their partnership with you.
4. Add Dispute Resolution Terms
The contract should specify how the issue will be handled if ever a breach were to occur. You’ll have to make a note as to who will be paying for the attorney fees and any other costs that will be required to make in to settle the dispute. Also note the state or district in which disputes will be settled, particularly if the parties to the contract reside or are licensed in different localities. You may also see artist contract templates.
If a party to the contract breaches and lawyers get involved, it is usually customary for each party to pay their legal fees. However, parties can require the losing side in a legal dispute to pay the winner’s attorney’s fees. You may also see proposal contract templates.
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5. Put In A Clause Regarding Contract Termination
Specify how long the contract will last. If it’s for a one-time exchange of services, then you will have to state that the relationship will end once everything has been taken care of. If it’s a contract for ongoing services, then you’ll need to put into detail as to how either party may terminate the contract should one wish to end the relationship. You may also see photography contract templates.
The contract should contain language allowing for termination if one party violates the sample agreement. That includes how much termination notice should be given and other consequences for breaking the agreement.
If neither party breaches the contract, it will terminate whenever the performance is completed. Just remember that this can only be done if it’s stated that the contract will end once both have completed their end of the agreement or if a specified date was stated in which the relationship would end. You may also see partnership contract templates.
6. Be Sure the Contract Is Applicable to the Law
Research which laws pertain to the contract to ensure that you’ve placed nothing illegal and that the document itself is legally enforceable. You may also see yearly contract templates.
7. Reserve a Page for the Date and Signature
Once you’ve done putting everything that the contract needs, the last thing you’ll have to place in it are the signatures of both party members as well as the date in which the contract was signed. The reason why these two pieces of information are needed is that they show that the party members involved have come to an agreement on a specific date and that they have come to official partners. You may also see production contract templates.
8. Ask a Lawyer to Help Proofread and Edit
The last steps are to make sure that the document has everything that it needs. That means that you will need a lawyer to help ensure that your business contract is legally enforceable and that you’ve covered everything that you’re needed to. Although this will increase your expenses, even if by just a bit, then the payout is worth it. Go with a lawyer who you trust and one that knows the ins and outs of making a business contract. You may also see consulting contract templates.
If you would like to learn about the other types of contracts you can make, then all you have to do is go through our site. It has many different articles that contain information that you can use at any given point in time. Just be sure that you go through each of them thoroughly so that you can make use of whatever you have gathered in the most effective way possible. You may also see investment contract templates.
1. What Does a Business Contract Mean?
A business contract is a legitimate document that specifies the terms of a business deal between two parties. It contains key elements such as an offer, acceptance, and consideration for situations where services are being offered in exchange for a fee.
2. What is the Purpose of a Contract?
The main purpose of using a contract is to help businesses or involved parties to safeguard their resources. A well-drafted contract provides transparency in business relationships and protects the rights of parties. It also helps from potential contract disputes arising.
3. What are the Different Types of Contracts?
Following are some of the examples of different type of contracts:
- Lump-Sum or Fixed Price Contract
- Cost Plus Contract
- Time and Material Contract
- Unit Pricing Contract
- Unilateral Contract
- Bilateral Contract
- Aleatory Contract, etc
4. How Many Pages Should a Contract Be?
A contract can be anywhere between 1-20 pages and should not be made to exceed that. If your contract is more than one or two pages, it is better to insert page numbers, with your signature generally going on the last page.
5. Why Should Business Contracts Be in Writing?
A business contract should be in writing, as there are chances that one of the involved parties may tend to forget their responsibilities. Some may even misunderstand the terms of the contract. To avoid this, a written contract can help you take matters to court in case a breach occurs.