Contracts are the backbone of many business deals. It’s imperative that this written set of expectations and terms for transactions and agreements reflect what both parties agreed to. Because contracts are enforceable in court, you should ensure that your company only uses ones that are well structured and contain all the vital information.
While the contents of a contract can vary somewhat, there are basic elements that must be present in all contracts. You can add other elements, but you should be sure that the following is included:
All parties must be named
All parties to a contract must be named in the document. You can’t hold anyone liable for breaking the contract if they weren’t named as a party to it. Some projects may require a series of contracts with different entities, so be sure to plan for that if it’s necessary.
Terms for both sides
The responsibilities of all parties must be clearly outlined in the contract. There should also be information about what should happen if one party realizes they can’t uphold their end of the bargain. Ideally, the terms will be very detailed so there’s no room for misinterpretation.
Dispute resolution methods
Including how disputes related to the contract are handled is important because it sets the standard. Many business contracts demand alternative dispute resolution instead of a court battle.
Ensuring your company is protected by the contracts you use is important. It’s best to be as clear as possible so you know that you’ll be able to hold the other party legally liable if they break the contract. If you find yourself in a contractual dispute, be sure to explore the legal options at your disposal.