In the olden days of business, handshakes and gentlemen’s agreements were usually enough to seal a deal between two parties. While there are still certain businesses that close deals with a handshake or a gentlemen’s agreement and get away with it, doing the same for your business can put it in unnecessary jeopardy later on and force you to shut it down eventually. Thus, you should draft a business contract for every deal that you make no matter who the other party is. As you may have little to no idea at all how it can help you, here’s a quick guide as to what you shouldn’t miss whenever writing a business contract:
1. Names of both parties involved in the business deal
A business contract isn’t complete without the names of both you and the other party in it.
- You should make sure that both your name as well as that of the individual or business that you’re striking a deal with are spelled correctly as even misspelling a single letter can invalidate the entire contract that you’ve written.
- You should also include at least two lines at the very end of the contract for both you and the other party to affix your respective signatures to make it binding for authenticity as well as evidence purposes.
2. Payment details
Most – if not all – business deals usually involve money exchanging hands.
- Thus, you need to state in your contract how much money you’re willing to give to the other party if they’ve agreed to render a service for you.
- You should also include in your business contract any requirements that the other party needs to fulfill first to get paid as well as when should they expect their pay and what method of payment will you use to do it.
3. Confidentiality agreement
Your business surely has some practices and trade secrets that you don’t want any of your competitors to find out and use to make more profits than you. You’ll thus have to include a confidentiality agreement in the business contract so that they can’t spill any of your business practices and trade secrets out in the open or use them for their own benefit.
4. Termination clause
The other party in your business deal might not be doing what you expected them to do, so after giving it much thought, you decided to end your deal with them. Or it could be that the other party simply doesn’t want to do business with you anymore, and they want out. But for both scenarios to be legally acceptable, the contract that both you and the other party had signed should include a termination clause with instructions as to how and when each party can bow out of the previously struck deal.
As someone who runs a business, you can strike deals with other people by way of a verbal agreement or a simple handshake. However, non-written agreements can jeopardize your business. Thus, no matter how small or huge a deal you’ll be striking with someone for your business, you should always come up with a written business contract. However, since you might be clueless about business contracts in general, the quick guide above should help you identify what you shouldn’t miss when writing one. You should also make sure to hire a lawyer to review every contract that you drafted in case there are details in it that you had overlooked by accident.