When you’re working on a business, you will most likely encounter a contract one way or another. Recipients and parties involved may include you and an another partner, your stockholders, employees, contractors, and other individuals that may offer some benefit for your company. Of course, not following a contract may also spell big trouble for you and your enterprise.
According to numbers from the International Association for Contract and Commercial Management, about nine percent of business contracts made do actually experience some form of dispute or claim in the future. While these don’t necessarily translate to formal lawsuits, the reality of the matter is that there may be times when contracts can get confusing or unnecessarily technical because of a lack of understanding on a few fundamentals. Here are a few considerations:
Get The Key Parts Right
One of the most important considerations when writing a business contract is ensuring you get all of its parts right. Fine tuning the language comes in later, but make sure your draft at least has the following:
Define The Legal Matter
There’s the intention to make a contract about a legal matter at hand. Identifying the legal matter is important, as some subjects really do require written contracts for execution.
There should be an offer that one part will make in exchange of something of value, what is known as a “consideration.”
Understand The Offer
Your contract must have at least two parties involved. This is because one party is in charge of making the offer, and the other will accept it. Any kind of offer you accept without modification is a form of acceptance. If for instance you say you’ll “think about it,” then no agreement has been made because you didn’t accept the offer.
The Offer Length of Time
However, just because an offer has been made doesn’t mean it stays open for the rest of eternity. Offers are only open for as long as the offering party says it’s open. It’s best you include a timeframe as to when you’ll accept the offer, as if you don’t, it will be open for a “reasonable” amount of time. In this case “reasonable” can depend on a lot of things, such as the industry you’re in, but can end up becoming very open for interpretation. In fact, you may revoke an offer you’ve made at any time after offering provided the other party hasn’t accepted it.
Counter Offers and Rejections
You have to consider that the other party won’t immediately accept the offer and will either reject or offer another variation of the deal. Once this happens to something you’ve offered, then what you’ve offered has been rejected, and now you have to assess whether the counteroffer is something you want to accept.
Accepting the Terms of the Offer
Once you or the other party say “yes” to an offer, then you’ve accepted the offer. All of the terms in the contract have to be agreed upon in order to fully accept it.
It’s because of the influence these contracts hold over company operations that make them quite the scary things to deal with, but you don’t necessarily have to be immensely trained in legal matters to know how to write a proper business contract. A business lawyer however can provide a great deal of insight when it comes to ensuring you can get the kind of information you need into the contract you want to show others. Click here if you want to learn more about these.