As a business owner, you want to make sure that you agree to contracts that 1) protect your business 2) ensure that you meet the objectives of the contract. Even if you retain legal assistance for your contract work, you should personally ensure that the contract is clear, specific, and focused. I’m sharing some of my best tips for creating airtight contracts.
- Get it in writing! Have I mentioned that? While oral agreements can be binding in court, they’re difficult to enforce. Even if you are working with someone you know well or feel that you can trust, you must have a written contract. Even if the law doesn’t require a contract, you should have a written contract. This removes a significant amount of risk and drama that you really don’t need. Trust me. Get it in writing.
- Keep it clear and concise. A contract doesn’t have to contain confusing legal terms to be legally binding. I recommend keeping creating short, clear sentences to describe the terms of the agreement.
- Negotiate with the right people. Don’t waste time attempting to negotiate a contract with a “junior” type employee. This person will have to clear everything with someone else and it becomes a game of telephone. You don’t have time for games so if you find this happening, politely but assertively ask to speak directly to the decision maker.
- Name the parties appropriately in the contract. You have to have the correct, legal name of the parties so it is clear what the responsibilities are. For example, if a business is organized as an LLC, identify it by its correct legal name (including the LLC suffix). Do not just use the the names of the people who are signing the agreement for the business.
- Go crazy on the details. The contract should spell out the rights and expectations for each party in detail. Don’t leave anything out because anything that isn’t documented will be nearly impossible to enforce.
- Define termination of contract. Ensure that you document the circumstances where the contract will be void. For example, if a vendor misses X number of deadlines you may want to terminate the contract.
- When in doubt, check with an attorney. It isn’t possible to be too paranoid or too diligent when you are talking about contracts.