Contracts are the lifeblood of smooth business transactions. If you’re new to running a business and have never drawn up a formal agreement, you might worry that you need a robust legal team to protect your interests. Contract construction and execution for simple business solutions don’t have to be complicated, and this guide from Geek Alabama provides tips to ensure that contracts work for you and not against you.
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The Value of Contracts
A contract is a legally binding agreement. While oral agreements can create an enforceable commitment between two parties, written documents are preferred. Contracts don’t exist to keep people honest; instead, the arrangement helps honest people understand guidelines and responsibilities while minimizing confusion. The clarity protects your business from unintended liabilities, allows for compensation when others’ duties aren’t fulfilled, and sets timely expectations for all involved.
Clear direction also preserves relationships. When doing business with family and friends, always spell out obligations in written contracts as misremembering details or presuming on a loved one’s benevolence can lead to strained bonds. Research indicates that about 70% of family businesses fail before reaching the second generation, so apply contracts as a framework to strengthen your company and personal connections.
Top Tools to Create Contracts
Online tools can help you create a contract for basic business scenarios without hiring a legal team. For example, the language for a nondisclosure agreement (or NDA) can easily be transferred from an existing document. You can search the web for templates, but ensure your contract is industry-specific.
You may use a recently signed contract as a basis for your own. Modifying the content for your aims shields you from specific issues you face and safeguards you from the off chance the contract itself is protected under copyright. Use an online tool to extract PDF pages to lift pertinent sections from a separate agreement. After copying the necessary information, create an altered PDF that fits your deal.
Pro Negotiating Tips
Practically no one comes to the table with their best offer, so never accept the first deal presented. Patiently study the facts of the agreement beforehand and outline your priorities. Discuss deal breakers with other stakeholders and unify your goals before negotiating so you don’t contradict each other. Also, make sure you’re working with the decision-maker. You don’t want to have to rehash details that were communicated secondhand. If you have to go through an intermediary first, propose that you sit in the follow-up meeting with the superior to communicate clearly and save time.
Understand the needs and desires of the counterparty. Prepare to sacrifice something in the exchange so you can offer a win-win solution. Sincerely strive to make the other party happy, creating a relationship that leads to future successful negotiations. Though you may be excited or looking for guidance, maintain strict confidentiality and build a team atmosphere in the talks.
Contract Creation Suggestions
Let contracts serve as boundaries for a fruitful deal and not as shackles that keep you locked into a terrible situation. Poorly written agreements can create headaches for both parties, causing a lose-lose scenario. Set the terms for when either party can terminate the contract. Every right and responsibility should be explicitly outlined.
Some contracts require many steps to be completed within a timely manner. To stay on top of these deadlines, download a task-tracking app like Harvest or TraxTime. Different apps have different features, from spreadsheet and invoice tracking to goal setting. Look over the options and find one that works best for you.
Disputes may arise after execution, so determine how to resolve misunderstandings. Arbitration has become popular in resolving disagreements to keep matters private and can be faster than in public courts. Outline the manner of arbitration and verify it is permissible under law.
Contracts are necessary for effective business operation. By keeping in mind the preceding points, you can guide your new venture to a profitable future.
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