When entering into a business relationship, it is important to give a great deal of thought to the relationship and the contract that will be drawn up between the parties commemorating the relationship. A well-drafted contract can protect the businesses and business relationships involved and outline the obligations and rights of the parties. It is important to take the right approach through the contract negotiation, formation, execution and enforcement process.
When forming a contract, it is important to consider and anticipate different circumstances that may arise during the course of the business relationship and address them ahead of time whenever possible. It is also important that the contract is detailed and lacks ambiguity in its language. In addition, all agreements should be obtained in writing, as oral contracts can be difficult to enforce. The terms contained in the contract should be clear and understandable and address the obligations and remedies of the parties. It can be helpful to also include a language in the contract concerning confidentiality to protect trade secrets and other important information.
It is also important to include details of the obligations and responsibilities of the parties under the contract. The contract should list specific payment details, dates, requirements for payment and methods of payment. Because problems can arise even in circumstances of the most well-written contract, it can also be helpful to include language for how the contract can be terminated, what state laws govern the contract in the event of a dispute, a clause providing for mediation or arbitration in the event of a dispute and the remedies available to the parties if the contract has been breached.
Lastly, it is important to keep in mind that a business contract can help establish and govern business relationships, but can also provide legal options when an agreement has been violated and a business relationship has been disrupted. Because business contracts balance the importance of business relationships with the equal importance of protecting business interests, they are critical for success.
Source: Smallbusiness.findlaw.com, “How to Write a Business Contract,” Accessed Jan. 30, 2017