Contractual Confidence: 5 Tips for Business Contracts You Can Trust

Businesses run on contracts. Whether it is a complex contract with a client or a simple delivery arrangement with a supplier, good contracts make business operations run smoothly.

Contracting with others can be tricky, but it is definitely necessary. Use these tips to create contracts that are more likely to stand up to legal scrutiny.

  1. Write it down.

Although it may be tempting to use oral contracts or even prior contracts, it is not a good idea. Oral contracts are unreliable and should be avoided in most circumstances. In certain types of transactions, they are not legally allowed at all. In addition, each new transaction should have a new contract, or the contract that you used before should have a continuation clause that indicates that the arrangement will stand for future transactions until a certain date or until the parties indicate in writing that they wish to terminate the current agreement.

  1. Be sure that you include the right names.

You may not realize that the person negotiating with you is not actually who should be on the contract. Even individuals operate under business names or other people’s names, so it is important to ask whom the person is representing before the contract is drafted.

  1. Include every part of the agreement in the contract.

Sometimes businesses will agree to most of the terms in writing, but they realize that they forgot to decide how a certain situation will be handled or leave out another aspect of the agreement. If you work out additional terms either during or after the contract is in place, be sure to revise the contract so that it accurately reflects your verbal agreements. Some side agreements will not be enforceable if you do not get them in writing.

  1. Include provisions on how to terminate the contract.

If either party is unhappy, they should be able to get out of the contract if necessary. Decide how much notice you should give the other side to terminate the contract. Will there be penalties if it is terminated without the notice? Is the contract required to be in effect for a certain amount of time? If one party violates deadlines or other obligations, will that allow the other party to terminate? Decide what it would take for you to want out of the contract and build that in properly.

  1. Get legal help.

It is a good idea to have an experienced contract lawyer review your business contracts, especially if you will be bound to them for a significant amount of time. Call Integrated General Counsel at 925-399-1529 for more information.

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Written by Integrated General Counsel

Our focus includes handling a variety of corporate matters and also includes litigation in state and federal courts. Our current practice includes providing transactional services and representing a variety of small and medium-sized companies as their outsourced general counsel.