Contractual Tips for Protecting Your Business
Creating strong contracts is one of the most effective ways you can protect your business. While every transaction is different, there are a few general guidelines that will help ensure your agreements are solid:
- There are certain oral contracts that are binding, but they are very difficult to enforce. Do not take the risk of trusting a verbal agreement. All of your business contracts should be in writing. Also, where possible, you should keep the contract language simple and avoid the unnecessary legalese that can complicate matters.
- Before negotiations get serious, you should confirm that the individual you are working with has authority to legally bind the other party. You don’t want to waste time and effort only to discover the other person has to take the deal up the chain of command for approval.
- A common mistake made by many new businesses is to incorrectly identify the parties in the contract. You should always use each party’s full, legal name. Thus, if they have a “dba” name, you should clearly identify them as “XYZ, Inc. doing business as ABC.” You should also avoid including the business owner’s name unless he or she intends to be personally liable.
- All terms and conditions in the contract should be outlined clearly and in detail. If there were any verbal agreements made during the contract negotiations, they should be included in the written document. If a term, condition or oral agreement is not included in the contract, an amendment should be drafted to include it in the document as soon as possible.
- While you don’t want to think about terminating the agreement before it even begins, it is imperative that you do so. The contract should have a clear termination date and outline what will occur if one of the parties defaults under the agreement.
- If the agreement deals with confidential business information, the contract should include promises by all parties to safeguard the private information.
An experienced attorney at Nielsen Law Group is available to help with all your business matters. You can schedule your initial consultation by calling (480) 888-7111 or submitting a web request here.