You have to do what you can to protect your business. Contracts are one way that you can do this because these documents set forth a written set of terms that governs all of your interactions. Your contracts need to be as detailed as possible so that both parties know their responsibilities and what happens if they don’t uphold them.
While each contract will vary slightly based on the people involved and its purpose, there is some basic piece of information that should be included in each one:
- A description of each party’s obligations (what value they will provide, items they will deliver, services they will perform)
- Financial information, including deposit terms, payment schedules and penalties for failure to deliver or perform on time
- How the contract can be terminated, with what kind of notice and what else can happen during a breach of the terms
Some business agreements also require that the parties who know about the arrangement keep things quiet. A nondisclosure clause in the contract can be used so that the terms of the contract, scope of the project and other protected information can’t be released to anyone. Noncompete clauses are another term included in some business contracts. This stops one or both parties from being able to work with direct competitors or enter into direct competition themselves.
Before you present or sign a contract, it’s a good idea to have your attorney review your contracts to ensure that you didn’t miss anything important. If you’re the one presenting the contract, don’t be surprised if the other party wants to have their attorney look it over before they sign it.