Contracts do more than keep us honest; they make it possible to preserve the rights of everyone involved. Just because 2 people in a business relationship are both honest doesn’t mean that something can’t go wrong. There are a variety of problems that may arise when every aspect of an agreement is not plainly stated. You can avoid most of these problems by describing, in careful detail, every element of your agreement.
Put it in Writing
No one with a legitimate business would ever make important deals without a contract, but what about smaller deals, new clients, or even individual orders? No matter how big or small the deal, where there is an exchange of money, goods, or services—there should be a written contractual document.
Explanation of Goods & Services
What, exactly, is to be provided by each party? Including detailed explanations of what, how much, and for how long each party promises to fulfill is necessary to be sure that everyone gets what they’re supposed to get out of a deal.
Be Straight About Money
One thing that you should never do when writing up a contract is to be vague about money. If you leave wiggle room in stated cost, or any monetary responsibility, then you can bet that someone will take advantage of that.
What’s in a Name?
Be sure to include full names of everyone to be bound by the contract; this is to ensure that everyone involved is held legally responsible for their part in the agreement.
Rights & Obligations
Contracts exist to preserve an agreement, to set it in stone so that we actually perform what we promise and actually receive what we’re entitled to. What good is it to enter into a legally binding contract, if you don’t clearly state the rights and obligations of all parties?
Find a Mediator
When entering into a contract, a common practice is to designate a mediator. This can be very good for resolving disputes because it usually speeds up the process of finding common ground. You can always elect to handle disputes alone, but bringing in a mediator is an effective way to quickly get past an issue and move on, especially in those cases where individual interests cloud your own judgment.
At the onset of any business agreement, no one ever expects it to go terribly wrong, but you had better plan for it. The strength of any contract lies in its ability to include plans for resolving all disputes. There are many things that can change or go wrong during the life of a contract, which is why you have to do your best to think of every possible contingency and to outline a response for it.
2 Heads Are Better Than 1
Finally, when writing up a contract (especially crucial ones like company bylaws), the smart approach is to bring in a partner. The key to creating a strong contract is to try and think of everything. There is a good chance that you will miss something, and your partner will be there to catch it. Once you have gone over and over the specifics with your partner, you can put your contract into use with the confidence that you’re prepared for anything.
Consider this checklist before you sign off on your next business deal:
3 Indispensable Practices for Any Business Deal
Stephanie is the Marketing Director at Talkroute and has been featured in Forbes, Inc, and Entrepreneur as a leading authority on business and telecommunications.
Stephanie is also the chief editor and contributing author for the Talkroute blog helping more than 100k entrepreneurs to start, run, and grow their businesses.