Getting into a business relationship based on a business contract with another person or group of people is a serious undertaking, and such should not be entered into until you have thoroughly thought about it. Winning and losing a business contract almost always comes down to the quality of your business contract (Source: https://www.marketingdonut.co.uk/marketing/sales/tendering-for-contracts/write-a-winning-business-proposal).
Business contracts are important to the relationships among business partners and companies. These contracts clearly state the terms of agreements, products or services to be given out or received, and any dateline on ground. Contracts are particularly important because they avoid misunderstandings and disputes among business associates and at the same time giving legal solutions in case a party does not meet up to their part of the contract.
Knowing how to write a winning business contract can ensure proper protection for you and your business. Here are effective steps to follow when writing a winning business contract that your client will happily sign:
Ensure that all Parties are legally able to Participate:
It is important if all members entering the contract fully understand what they are signing so the contract is valid. To further enlighten on this, all parties getting involved should meet these requirements:
· All members have to be at least 18 years of age; else the contract will not be legally valid. But look up the laws in your state as there might be exceptions to this.
· The parties involved must be stable mentally, so as to understand the contract fully. An adult sometimes might not be able to understand what the contract requires of him/her.
· A contract will be void if when it was signed, a party was intoxicated or mentally impaired. When an individual is sober and has a sound mind, he can decide legally whether to continue with the contract or not.
(Source: https://www.wikihow.com/Write-a-Business-Contract)
Get it in Writing:
Each time you get into a business contract, it is advisable for you to have a written proof of the agreement and also have specific terms binding each party. In some small business context, some agreements can be met orally, but such agreements will be hard to enforce on people’s memories, making it hard to remember or interpret it (Source: https://smallbusiness.findlaw.com/business-contracts-forms/how-to-write-a-business-contract.html).
While writing the contract, it is advisable for you to sound professional, therefore always begin by writing down basic information such as:
- The date on the top of the page
- The names of individuals or companies involved and
- The title of the business.
If you are standing in for a business, write both the name of the business and the names of the people signing the contract on behalf of the business – these names will include the name of the CEO, the director or the president of the business.
Use a Language you can understand:
It has been proven that the best business contracts, especially those involving small businesses are written in simple English, where both parties fully know what they are signing. There is absolutely no need to get intimidated that a business contract has to be written in “legalese”.
One way of making your contract presentable is by numbering and labeling each paragraph, and including the right topics in those paragraphs. By having the contract into various units, it makes it much easier to be understood by both parties, and even by the legal authority in case it get to that, because in court, the judge will adjudicate the case depending on how the average person will interpret the contract.
Be specific in your language, clearing stating what one party is willing to offer and what the other party is willing to pay or do in exchange. State acceptable means of making transactions either by cash or credit card, and also include the amounts being paid and the dates due.
If a property is being exchanged, clearly state its exact location and give its legal description. When selling other smaller goods, provide their size, make, model, color and delivery date (Source: https://smallbusiness.findlaw.com/business-contracts-forms/how-to-write-a-business-contract.html).
Make it Detailed:
Ensure that you lay out the rights and obligations of all parties involved into an understandable language, therefore leaving no room for any further explanation. If for example you want delivery on the 1st of every month, use the exact number; avoid writing “early-month”.
In an instance when you or the other party wants to make changes to the existing term, ensure you have an amendment to the contract that is written, instead of depending only on oral agreement, because a court will not accept an oral agreement.
Give a detail of the terms of exchange. Describe clearly what type of services or goods will be exchanged. For instance, “Party A has agreed to deliver 50 shoes in 14 days to party B. The shoes will be charged at $10 for a total of $500 to be paid fully by Party B within 14 days of delivery”.
Clearly State the Terms of Agreement:
In order for the contract to be legal, an offer has to be made clearly and accepted. Before the final contract is written, it is expected that both parties know what the contract stipulates, and it should meet the needs of both parties involved (Source: https://www.wikihow.com/Write-a-Business-Contract).
Add a Confidentiality Clause:
Because most people cherish their privacy and may not want their personal information disclosed to others, you may consider adding a confidentiality clause to the agreement. In all businesses, there are important and confidential information; whether it is a sales plan, a recipe or the marketing strategy of the company. Most businesses include a confidentiality clause to protect sensitive information. But when the other party will not be exposed to any confidential information, this type of clause will not be needed.
The principles behind having a confidential clause are the same with having a non-disclosure agreement. Also, you may want to consider including a non-complete clause, prohibiting an individual from carrying out similar plan with your competitor for a specific period of time (Source: https://smallbiztrends.com/2013/05/small-business-make-a-contract.html).
In addition to that, add dispute resolution. Because misunderstandings are likely to occur, a winning business contract should specifically state how issues will be handled in case a breach occurs. State which of the party will take care of legal charges and what will be the remedy. Also include the location where the dispute will be resolved.
State when the Contract will be terminated:
Clearly specify the duration of the contract, stating if it is going to happen over and over again, or it will be terminated immediately the transaction is completed.
Be flexible here by allowing termination if one party violates the terms of the contract, and include how quick the termination notice will be issued.
Get a Lawyer to Review the Contract:
Finally, be certain that the contract is in accordance with the available law. A lawyer can help you with that, and he can also assist you with the termination clause, giving you suggestions on how to get the best out of the termination (Source: https://smallbusiness.findlaw.com/business-contracts-forms/how-to-write-a-business-contract.html).
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