How to Write an Effective Business Contract?

Answer 1

In the business world almost all agreements need to be formalized through some form of legal document. For services to be rendered or products to be sold, this legal document is typically a business contract between the recipient of the product or service and the provider. To ensure that the contract is valid, and that your rights are properly protected, there are several aspects of a business contract which need to be analyzed and included in each contract.

The first important aspect of a business contract is to clearly identify the product or service which is being provided. The contract should spell out not only what is being provided, but when as well. Adding as much detail as possible to the contract is important because any detailed which is not met could be considered an event of default. The contract should also spell out how much money will be charged for the service and any additional services which could be purchased at a later date. The contract should also specify when the payment should be made.

Another important aspect of a business contract is to clearly stipulate when the contract will end. All contracts should have a termination date, which is stated as either an exact date or an anniversary of the commencement. The contract should also state whether the contract can be terminated by either party during the term of the contract. If necessary, the contract should also state any remedies that will need to be paid in case the contract is terminated early.

The third important aspect of a business contract is to identify remedies which could occur if the obligations of the contract are not met. For example, if the contract is to have a service completed, the remedy section should address what will occur if the service is not completed on time or completed well enough. The contract should also address what will occur if payment is not received on time. This could include late fees or interest on the payment. It is important that the contract contain remedies of default for each party. Otherwise, the parties would not have any legal motivation to complete their end of the agreement.