The secret to writing a business contract is to include all the important aspects of the agreement. This makes it legal and binds all parties to implement its provisions. In addition, make it as simple as possible so that one party does not default the agreement because it is complicated. The following are tips for efficient contract writing.
#1. Identify the Parties Clearly
You need to mention the names and identities of the parties in the business agreement. Include the entire legal name of the business entity that you are dealing with. In addition, including the parties’ contact information such as telephone number, email address and physical address.
These details indicate where partners can address official correspondence about the agreement. Avoid using the names of the undersigned people if they actually represent a corporation or company. Instead, use the LLC, Inc or Ltd suffix of the company.
#2. Indicate the Purpose
The biggest importance of writing a contract is to describe its purpose. Be specific on the roles of all parties involved therein. The purpose can be the supply of described goods and services or consultancy on certain business need. There is no universally agreed length of a business contract.
However, it is prudent to be precise while capturing the essential terms of a contract. Let the agreement include the right parties. If you are dealing with a company, for example, do not let a junior staff sign it. This may cause trouble if the person leaves the company acrimoniously.
#3. Describe All Details of the Contract
When researching on how to write a contract, you will realize that contracts vary from one industry to another. All reputable contracts discuss the obligations of the parties so that it legally binds them, and not just because they verbally promised to do so.
In case of future disputes, leave some room for alterations or additions. Let the document allow a written amendment to include matters that arise in future or that one of the parties forgot to include.
#4. Describe Payment Obligations
When writing a business contract, financial details are usually important. Let the contract state who pays whom and the figure that needs to be paid. Include also the date and other conditions of the payment. Will the payee give the payment in full or in installments? Many people do not know how to write a contract that properly captures the contentious issue of money. The method of payment is also important to include in the contract. While certain companies prefer a business check, others are more comfortable with a direct bank fund transfer.
#5. Indicate Circumstances of Terminating the Contract
All contracts have durations. Indicate when the parties involved hope to terminate it. Additionally, specify conditions that may cause the contract to be null. Examples are the failure of either party to implement certain obligations, failure of the payee to submit prompt payments and other legal situations.
#6. Agree on Ways to Resolve Disputes
While some disputes are bad enough to nullify a contract, some can be mild and resolvable. Determine the parties’ desired way of solving matters arising. Proper contract writing involves the resolution of disputes via a selected mediation or arbitration team. Otherwise, court litigations may be lengthy and expensive.
#7. Choose a Jurisdiction to Govern the Contract
When writing a business contract, specify the country, state or district that it applies. This helps you to avoid ugly, embarrassing and expensive legal tussles in future. After following these procedures, check out this infographic about other common voids in a contract. It discusses 8 common mistakes that could potentially nullify a contract.