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By Corinne Hammond
Contracts are an essential part of any business entered into during the startup phase and beyond. However, it can be challenging to draft a contract, especially if you have a lot of information to cover. That said, Gloria Rand offers some tips on how to create a contract that will give you peace of mind.
The simpler, the better
A long contract with too many legal terms can be confusing and not enjoyable for anyone to read through. Instead, keep it short and straightforward, ensuring that all the relevant information is listed under the appropriate headings so that it is easier to read through and is clear enough to understand when read through for the first time.
Correctly identify each person
It is crucial to identify the legal names of all contract parties so that it is clear who will be responsible for fulfilling their obligations. For example, if the agreement is entered under a company name, it must be detailed as such and not only with the names of the individuals who signed it.
Do not waste your time with the wrong person
Let’s say your contract is complete and ready for use. Now you need to negotiate a deal to purchase goods or services from a customer or supplier. You should not waste your time dealing with someone who does not have the authority to enter into an agreement. But this can be tricky because it is not always easy to find the right person to talk to or even get through to. If you’re having trouble getting through to the person in charge, just remember to be persistent and firm in your communication, and you’re sure to reach the right person in no time.
It is important to include all details
Each party should be able to see every detail of the agreement clearly. Moreover, written contracts are more binding than verbally entered agreements. Just be sure you include all details you want to so that there is no dispute later on. And remember that contracts can be modified at a later date provided they are signed by both parties involved.
Specify your payment obligations
You should clearly define who will pay whom and when payments must occur when negotiating payment terms. This will ensure that your client pays their invoices on the due date. An invoice generator is a great choice because it lets you create professional invoices using premade templates. You can also download the invoices in any format you prefer. Furthermore, it is important to have a clear understanding of your financial situation in order to negotiate the best terms. Therefore, choose cloud accounting software for your business that will give you accurate information about your financial situation and allow you to make informed decisions when you negotiate. If you are looking for software to help you create your contract from the start, then you could try Bonsai and Shake to help you create suitable contracts from the get-go.
Specify the circumstances that will cause the contract to terminate
It is essential to clearly define the circumstances under which the parties may terminate the contract. If one party fails to fulfill its obligations, the other party should have the ability to end the contract without being held liable for it. Furthermore, if there is a dispute, the contract should clearly state how it should be resolved, preferably without it needing to be settled by the courts.
Make sure your contract remains confidential at all costs
A business may have to give over sensitive information to another company when they hire them to provide a service. Therefore, it is vital that both parties have an agreement in place that keeps confidential any business information they are privy to. If you do all the above, you can rest assured that everything will go according to plan. But most importantly, you’ll have peace of mind that all agreements entered into will remain confidential at all times and will be in the best interests of both parties involved.
About the Author: Corinne Hammond, who has worked in venture capital, corporate management, and finance, understands the stress that comes with the daily grind of running a business. She developed Be Biz Minded to offer quick access to educational resources for entrepreneurs and small business owners to help them feel as prepared as possible as they work to grow their businesses.