Business contracts are devised to protect the interests of all parties involved in a trade. The client ensures they get the quality of work they’ve paid for, and the party offering their services ensures that they won’t be scammed. If any of the two parties break the terms and conditions of their agreement, the other party can use the contract to hold them legally accountable. There are a lot of clauses that should be included in a contract to protect your business interests. If it’s your first time signing or creating a contract, here’s what you should do to protect your rights and business interests.
Write it Down
One of the fatal mistakes anyone can do, whether as a business, freelancer, or contractor, is to take the other party’s “word” for it. Business exchanges done on words are promises are only a recipe for disaster. Although you can legally enforce an oral contract, it will be much harder to prove the exact terms, conditions, and clauses. Once you finalize discussions and negotiations, be sure to get everything down in writing, after which both parties should sign the contract. That’s the best way to prove everything you’ve agreed upon and hold the party at fault accountable.
Outline Important Clauses
While you’re writing the contract, you’ll probably be focused on outlining everything you have discussed. Surely, you should start with outlining the most important clauses for your business. This includes all terms, conditions, and requirements you need to fulfill your part. However, there are a few important clauses that may slip your mind yet are essential to be included. To have a complete idea of what should be included in a business contract, be sure to look up templates for similar contracts. Once you have all your business interests well-defined, outline the clauses and send a draft to the other party to review. Be sure to highlight the clauses that can be negotiated and the non-negotiable ones.
Discuss Workflow and Payment
One of the clauses you might forget to write down is the work process. Negotiations often focus more on pricing and services and less on work processes and workflow. Whether you’re providing or receiving the service, be sure to go into details about the specific services offered and the pricing of each service. If certain amends require an additional budget, be sure to set that straight in the contract. If you have multiple business partners, using a contract management software or website can be a great way to manage contracts and set reminders. It’s common for business owners to forget contract expiration dates when using manual resources, so such a tool will greatly optimize your process.
Cover Different Outcomes
It’s normal for obstacles to rise in the field of business, and that makes discussing different scenarios crucial in any contract. Take the time to brainstorm with your team everything that can go wrong and the best possible damage control for every specific situation. While certain outcomes can be amended, there should be a few lines that can’t be crossed. Moreover, be sure to include termination clauses that work for both parties. It’s also wise to consult an attorney while drafting the contract to protect yourself against liability in case the mistakes are from your party’s side.
Protect Confidentiality and Intellectual Property
You’ll have to share a lot of confidential information with your business partners, none of which you’ll want to be leaked or used against you – during or after the contract’s duration. To protect your confidential and private information, you should add a confidentiality clause that restricts the use of your information without authorization on your part. Likewise, you want to protect all intellectual property from being used without authorization. Whether you’re purchasing the rights of ownership from the service provider or want to hold onto your intellectual property rights after offering the service, this clause will protect your business.
Use Simple and Clear Language
Once you start looking into contract templates, you’ll come across a lot of jargon that doesn’t make any sense to you. While some terms are necessary to be included, like “parties”, “hereafter”, and “hereto”, a lot of the legal jargon can be substituted with simpler terms you can understand. Whether you choose simpler terms or stick with complicated jargon is up to you, but keep in mind that you’ll be held accountable if you make mistakes due to choosing terms you didn’t understand.
Landing a business deal is a cause for celebration, but amidst all the excitement, you mustn’t forget that a deal is never complete without a contract to back it. A contract will serve as definitive proof in case either party fails to hold their end of the deal. That’s why a contract must never be taken lightly; you should make sure that it covers all the clauses that protect your business interests without putting you at the risk of liability.