Entering into a business contract with another party is quite a serious thing. You should foresee the ramifications and draw up a contract that is beneficial to both. You should be careful enough not to fall into any trap by engaging in harmful arguments. Even if you are entering a business relationship with a family member it is important to protect your share of business. Your contract should address all the possible situations that may or may not arise. And ensure there are no ambiguities. Here are a few tips.
Write it down
Always make sure you have the business contract in writing. Whenever you enter a business relationship you should have the written proof of the agreement and you should be aware of the terms and conditions by which you and your partner are bound. Verbal agreements may work if your business is small, but still they are not recommended as they can lead to huge problems in the future. They are usually faulty and often misinterpreted.
Always ensure you use a very clear language that you and your business partner can understand. If the language is not clear, the contract can lead to a lot of ambiguities. Always use plain English so that both parties know what kind of agreement they are entering while signing. The terms and conditions should be specific to each party’s obligations. One of the best ways to do it is by numbering and labelling each paragraph and including only the respective topic in the paragraph. It is easy to understand if the contract is neatly segmented.
Your contract should contain thorough details. The terms, conditions, obligations, rights and provisions, even your marketing plans should be mentioned in a clear and specific language. It should not give rise to any ambiguities and misinterpretations. Suppose you want the delivery by 10th of every month, make sure you specify the number instead of writing “Tenth”. If you or your business partner decides on a new term or condition or change the existing one or enter a new investment, make sure you add an amendment in the contract in writing.