6 Secrets for Writing a Solid Business Contract


It is no secret that the business world is full of different types of agreements between two business parties. Although oral contracts can be considered as legally valid to make any forms of business transaction official, a formal written contract is often used by the majority of the businesses when engaging in transaction and operations. What is great with putting your contract into writing is that both parties will have a legal document that sets expectation and resolutions in case of any negative situation.

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All About Contracts and Its Importance to Your Business

Before we will start discussing the tips on how to write a solid business contract, it is important to know its definition first and foremost. According to a Wikipedia article, “a contract is a voluntary arrangement between two or more parties that is enforceable by law as a binding legal agreement. Contrat is a branch of the law of obligations in jurisdictions of the civil law tradition”. Therefore, a contract is basically required when there is a business agreement between two or more parties.

While an oral contract or agreement works fine, there is a possibility that the relationship between two parties becomes sour due to misunderstanding and unresolved issues. Without a written contract, it will be hard for the court to determine which party tells the truth. It potentially prevents a “word against theirs” scenario, which is often a major headache to most judges.

So if you and a couple business partners are planning to run a startup business, make sure to keep everything legal to set the rights and expectations of the parties. In this section, you will learn the true significance of having your business contract formally written.

Serves as an official record of what is agreed upon between the parties.

One of the main purposes of writing a contractor is to establish and put everything into record what the parties have agreed on. Let us take for instance; the content of the contract should clearly state the rights, responsibilities, and obligations of each party. The record also acts as a guide in terms of the agreed completion date, payment of the work once completed or the terms on when to terminate the contract if possible.

Protects Your the Confidentiality of Your Business Strategies

When you have people working for you, it cannot be completely avoided that you share with them your company’s marketing plans and sales strategies. That is why a confidential agreement should be signed by your employees to prevent them from disclosing market-sensitive, technical, and commercial information. The concerned party will be legally bound to hold all their knowledge in secrecy for a given period of time. Once the agreement has been violated, the concerned party will be held liable under the agreement.

Avoids Costly Legal Proceedings

While you want your business partnership to last long, there will always be a possibility that your business relationship with your partner will turn sour. So when one of you breaks the agreement, your reference in determining the party that is at fault will be the written contract. Having a written contract available can really help in preventing any chances of blowing up the issue that will result in costly and time-consuming legal proceedings.

Ensures Security and Peace of Mind

No matter what type of business dealing you are planning to enter, having a written contract is a great way to ensure security and peace of mind. Let us take for instance, a written employment contract that determines the terms and conditions between you and our employee. The contract is used to set forth the duties and responsibilities, wages, and overall employer-employee relationship. The employee will be legally bound to perform diligently his assigned tasks as stated in the job description while the employer will be legally responsible to comply with the payment of the employee’s monthly salary and other government mandated benefits.

Tips for Writing a Solid Business Contract

1. Keep the Content Brief and Simple

When writing a business contract, you should always keep in mind to use a language that can be easily understood by the other party. The best contracts are often written in plain and simple English so that both parties will be able to easily understand its context and know what they are signing. Instead of using too many “heretofore,” make sure that the wordings of your contract as short, clear, and simple as possible. It is also recommended to use numbered paragraph headings so that the reader will be alerted what is written in the paragraph.

2. Make Sure to Lay Out All the Details

It is important that the right and obligation of each party are carefully spelled out in the contract and make sure that they are understood by both parties with little room for interpretation. Take for instance if you want the supplier to deliver the materials every 15th of each month, using numbers instead of writing words, such as “mid-month” will make the contract more effectively. In case both parties agree to a new term or made some modifications to an existing term, it is recommended to add a written amendment to the contract.

3. Use Appropriate Legal Names

An effective contract should be able to identify the parties by their full and appropriate legal business names, such as corporation or LLC, and not refer them by the names of the persons who are signing the contract. It is also critical to be certain that person who will be signing the contract with you bears the right to represent on behalf of the LLC or corporation. This is a great way to ensure that the contract is legal and accurate in case any issues on the agreement should arise.

4. State the Action be Used in Case of Contract Termination

There are some instances when one or more parties decide to cancel or end the business contract. When this happens, it is important to determine the type of action that should be implemented to come up with a decision on how to terminate or cancel the contract. Oftentimes, when a business contract is canceled or terminated, one party is required to pay the other or perform a specific action. Take for example if you have missed a lot of deadlines, your business partner has the right to end the contract.

5. Include a Mediation or Arbitration Clause

In case a dispute between business partners should arise, it is a wise idea to include an arrangement that the concerned parties enter either a mediation and/or arbitration to resolve the issues and save the partnership. When the parties involved enter a mediation, they will try to work out, address, and find a solution to the problem usually with the help of a neutral mediator. The resolution should be agreed upon by the concerned parties. If the mediator failed to resolve the issue between the parties, an arbitrator is required to hear the arguments of both sides and come up with a reasonable and neutral solution that both parties must comply.

6. Make Sure to Include the Details of Payment

One of the most common reasons for disputes is monetary issues. If your business has outstanding loans and debts, it is extremely critical to make sure that your contract includes the detail of payment and how the parties should meet the payment whether it is in installment or upfront. You may also want to include the type of payment, such credit, check, or cash.

Sample Business Contract that You Can Download and Use as References

Business Consultant Agreement Sample

business consulting contract sample page 001 788x1020 upstatenyresources.org

Business Management Contract Template

business management contract template page 001 788x1020 4expertise.com

Business Partnership Contract Sample

business partnership contract sample page 001 788x1020 sbdc.duq.edu

New Business Contract Sample

new business contract sample 1 788x1020 sausd.k12.ca.us

Business Associate Agreement Contract PDF Download

business associate agreement contract pdf download page 001 788x1020 fpanetwork.org

Independent Business Contract Template Free

independent business contract template free 01 788x1020 chapman.edu

Small Business Contract Template

small business contract template page 006 788x1020 gsa.gov

Business Cooperation Contract Template

business co operation contract template 1 788x1115 hochiminhcity.eregulations.org

Marketing Contract Template

marketing contract template 1 788x1020 hiphopproduction.com

Professional Service Contract Template

professional service contract template page 001 788x1020 sdcwa.org

Final Thoughts

Although many would consider oral agreements as legal and binding in many businesses, this type of agreement can be challenging to enforce in court when there is a dispute between the parties. It would be difficult for the judge to distinguish which party is telling the truth, especially when the parties involved have different and opposing claims. That is why if you want to protect your interest, you should have a written contract drafted by a qualified and experienced lawyer. Always remember that having a written contract is a lot less risky than just having all your agreements verbally. In the case of a dispute, you will have a contract that clearly states the rights, responsibilities, and obligations of each party when there is a confusion or disagreement. You may want to check out our collection of partnership contract and other contract templates. They are a wide variety that you can choose and all are available for free download. You can also easily make any modifications on our templates so that it will match your personal purpose. So what are you waiting for? Download them now and make your reference in writing professional business contracts.



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