Experienced business owners are usually aware that having a binding business contract can help save potential trouble down the line, should any misunderstanding arise regarding any business relationship.
A solid contract must therefore have the several components to eliminate or reduce the chances of such problems creeping up and disturbing the normal operations of the business at a later date. These elements not only make the contract legally binding, but they also help in establishing a favorable working environment for your company. These components of a business contract do not have to be of a specific length, or be written in legal jargon. Agreements that are simple, handwritten or even oral contracts can be enforceable. Before writing or signing a contract, you should however be 100% certain that you are in complete agreement with all its terms, and where it happens that there are certain provisions that you are unsure of its meaning, it is always wise to consult with a business attorney who is more likely to be able to spot items in the contract that might not be in your best interest. The Following are Some Important Components of a Business Contract 1. Parties to the Contract The first segment of a business contract will often lists the names of the parties involved. This section must include the full names, title and company name of each of the parties participating in a contract. It should also have the complete contact information of both parties including contact numbers and email addresses. Of the two parties (or sometimes more,) one will usually the business that is providing a service or supplying goods while the other is the business paying for that particular service or product. For example, if a law firm hires a lawyer marketing company to help launch a new product, then the marketing consulting firm is the entity expected to provide the services while the law firm will be expected to pay for the services rendered. The company manager or owner will typically sign his name in the payee spot. 2. Terms of The Contract This section of a business contract includes a comprehensive description of the products to be provided or services to be rendered. It also includes the length or duration of the contract, price, details of payment, and when the goods or services will be delivered. Some business contracts might have special terms and conditions. For example, conditions that could result in the cancellation of the contract before its due date, or when a contract may be transferred to someone else. It will also state the date when the sale or project starts and the agreed completion date. 3. Delivery This section covers the details regarding the manner in which goods and services will be delivered. If you are the seller mention who covers insurance, shipping, and liability for the goods. Also, outline the exact method of delivery. If you are a service provider, then in this section you should explain the different stages of the project and mention how the client can observe and access the work done at every stage. 4. Signatures and Date Signature of both the parties is essential in a contract. It indicates that the seller has agreed to complete the specified work and the buyer is happy with the payment conditions. Usually, the date is written in two places. One where both the parties have entered their names or business names and the other area is next to the signature of the parties. The date is also written at the top of the contract thus indicating when the contract was created. Business contracts prepared by a business attorney or businesses usually include the date when the transaction takes place at the top of the contract. There are separate lines for the signature of both the parties. The title of the person who signs the contract should also be stated next to the signature, along with the address of the offices where notices of any changes in the contract can be mailed. 5. Amendments The contract must also clearly state the procedure that should be followed in case any party wants to modify the contract. Make sure to include that all adjustments should be made in writing and that both parties must sign the modified contract to indicate that both the parties are in agreement with the adjustments. 6. Compensation The payment section of the contract shows the total amount of product to be delivered. Make sure to state if there are any deposits or retainers required upfront before products are delivered, or services are rendered. Some companies set up periodic retainer or payment schedules to be paid in phases as the project progresses. Make sure that you include the exact amounts or percentages and exact dates in the contract. 7. Legal consequences Another important clause that should be added to any contract deals with what would happen if the company providing the goods or services fails to complete the work or deliver the goods, as well as what grounds exist for terminating the contract on grounds of a breach. It also spells out what would happen if the buyer fails to make payment. If you depend on the other party to provide resources or information to complete the project clearly state what would happen if the goods or data are not provided or the project stalls. Make sure that you include the time each party has to correct the situation before the contract is considered void.
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AuthorMy name is Kay and this page is where I will come to occasionally come to rant, rave and vent about anything and everything that I feel like talk about. ArchivesCategories |