Given the current state of things, it can be very tempting for individuals and small businesses to want to take on new business ventures or enter into new business deals right now. When entering into any business agreement with any person or entity, new or familiar, we urge you to have a written contract detailing the terms and conditions of the agreement. A written contract, although potentially formal and inconvenient, can protect you and your business.
Before you sign a written contract, be sure it includes, among other things, detailed language on the following general topics:
It’s always in your best interest to clearly and specifically state the terms of payment for any business agreement. The contract should include the amount of the payment(s), specific date(s) for payment (or repayment), and a detailed description of the method of payment (e.g., “cashier’s check delivered to the recipient,” or “wire transfer to the account ending in 1234”). If you are paying or receiving cash payments, those payment terms should always be described in the contract and confirmed in writing (e.g., with an e-mail or a receipt book). Once you reach an agreement on the specifics of how you want to pay or be paid, incorporate those terms into the contract.
Terms regarding termination or cancellation
Generally, a contract should include specific language about what happens if one or both parties wish to terminate or cancel the contract and how to handle that situation. Will you require written notice 30 days in advance of the termination? Will the party who wants to cancel the contract be required to pay a cancellation fee? Will there be a deadline by which a party much opt to terminate the contract without penalty? These are all things to consider with a business contract.
Any special circumstances or exceptions
Finally, be certain that any special or unique circumstances or allowances are specifically stated in the contract. If, for example, there is a potential for delay in either parties’ performance under the contract, decide how delay will be handled. Will the delaying party be required to provide written notice of the delay? Will there be a penalty for delay? Will you agree to waive any claims for delay? Details about special circumstances or exceptions can be extremely important.
These are just a few of the critical terms that should be included in any business contract. If you have any questions about the above information, or if you would like to talk with us about a potential or existing business contract, please call us. We would be glad to speak with you.
If you already have a contract in place, or if you’re looking for more information about contracts, please attend the upcoming webinar hosted by James Vann on April 2, 2020.