When you form a business, getting your contracts right will be crucial to your future success. It only takes one poorly written one to put all your hard-earned progress at risk.
Each business relationship you have will require a unique contract. Yet every one of them will share certain characteristics. Here are three of them:
#1. They should be clear to both parties
Do not try to write something that will give you a hidden advantage because the other party does not understand it. That will only work against you if things end up in court. Transparency is critical. You also want to avoid being vague because a court may take that margin of error and interpret it in favor of the other party.
#2. They should have clear time limits and ways to extend it
Your contract should be set to run out at some point, as otherwise, you could find yourself tied into an agreement that is no longer desirable. Remember, costs change over time, so you need to set out how you can renegotiate prices when the contract is due to expire or after a certain time period.
#3. An exit strategy
If one of you wishes to terminate the contract early, the other party will not always be as keen. Even if you are both happy to do so, agreeing on the specifics could be hard. It is best to think about this now, as emotions could get in the way later.
It’s not easy to create great business contracts alone. Remember, they are legal documents so getting legal help gives you the best chance of avoiding mistakes that might seem minor but could prove critical.