Business Advice – 4 Key Elements A Contract Should Contain

As a business owner, you will need to know a thing or two about contracts because most solid business agreements include a contract.  It is important that all parties understand the details of the contract.  This helps to avoid conflict or miscommunication.  It is your responsibility to comprehend your rights and obligations outlined in the contract.

You don’t need to be an expert in contract law, you just need to understand the basics of what your business lawyer is going to be trying to explain to you.  That’s right!  Do yourself a favor and be sure to hire a business lawyer to review any contracts before you sign them.  From a business case perspective, here are four keys to look for during the contract review process.

Payment

Make sure all payment details are specified. The financial part of a contract is often a point of contention, so it is vital that you get this part right. It should specify who is paying whom, and when. This section should include timelines, payment amounts, and obligations.

Disputes

The contract should determine how disputes will be handled. It is best to have this process determined before coming up against any problems. Do not overlook the value of dispute resolution. This can save you a significant amount of time, energy, and money in the future.

Termination

Make sure the contract contains the circumstances which terminate the contract. Unfortunately, occasionally parties will not hold up their end of the agreement. If this happens, you need to protect yourself. Detailing termination situations allows both parties to know when the agreement is over.

Confidentiality

Many times in business relationships, sensitive information is exchanged. It is important that all parties involved agree to a confidentiality clause. This protection is for everyone involved. You do not want sensitive data to be compromised.

Remember, running a business successfully does not need to be complicated.  Keep it simple!

For more information on business analysis, business planning, and ways to grow your small business profitably, please check out our website www.portalcfo.com.  Follow us on Twitter @portalcfo

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