An Entreprenuer’s Guide to Contracts by Elena Stewart
Try as we might, it can sometimes be difficult to uphold an agreement. Whether an arrangement falls apart due to accidents, negligence, or incompetence, a person’s word is only worth so much, and this is especially true when it comes to the professional world. Once you know what type of business you want to start, you should establish business contracts to ensure reliability and consistency from your current and future collaborators.
Why You Need a Contract
A business contract is a legal document binding certain parties to certain actions and conditions. Typically a contract will cover what service or product one party provides and what conditions the other party must satisfy to obtain that service or product. For example, an arrangement with a carpenter may dictate that in exchange for a set amount of money, they will perform specific carpentry work for you.
These accords are vital because they keep everyone involved accountable. They establish penalties for both parties not upholding their end of a given bargain while setting clear expectations for all involved. Making handshake deals and verbal agreements leaves you without legal recourse if the arrangement is breached.
How to Create a Solid Agreement
A good agreement is one that’s been reviewed and revised exhaustively by both parties. It should be mutually beneficial and as detailed as possible to limit either side’s desire or ability to seek out loopholes to avoid honoring their end. Never sign a document without reading it in its entirety and considering every possible implication of its wording.
A contract that isn’t legally binding is practically worthless. A legal professional can review the document and advise you on clauses that are exploitable or difficult to enforce. Though they tend to be expensive, the money you can potentially save with an airtight contract will make a lawyer worth it. If you cannot afford to have a lawyer polish your contract for you, research previous contract disputes on your own so you can be aware of common pitfalls. Learning from the mistakes of others keeps you from making many of your own.
Recent surveys found that over one-fourth of small business owners experienced difficulties with their company as a result of not seeking out the proper help. In addition to a lawyer, consider enlisting a third-party arbitrator for this process. When you’ve finished the initial draft of the document, an arbitrator can provide an unbiased middle ground during negotiations.
How to Negotiate and Execute the Contract
When negotiating the agreement, there are several factors to consider. Remember that the deal should be mutually beneficial, and both sides will be looking out for their own interests. The aforementioned arbitrator can help find wording that leaves you vulnerable, such as unclear timeframes or clunkily worded items that leave it ambiguous as to what is expected.
It’s important to know what you need to gain and what you can stand to lose during contract negotiation. Cloud bookkeeping system with invoicing can be used to keep track of your company’s financial health, while also helping the business to continue running smoothly while you spend time and energy negotiating. Automatic billing and payments will help to reduce the stress involved with shifting the agreements within your business.
Business contracts can be confusing. Be sure to research extensively and accept the proper help to guarantee you have an agreement that benefits everyone.