Beginner’s Guide to Business Contracts
Starting your own home-based business means interacting with clients, delivering the goods and services they expect from your company, and establishing partnerships with vendors and service providers. In order to get your new venture off the ground on the right foot, you should know what drawing up contracts entails both for you, the owner, and for your clients and vendors. Below, QUIK discusses a beginner’s guide to business contracts to help you avoid costly mistakes.
Understanding Business Contracts
Business contracts are essential when it comes to running and protecting your business. They are legally binding documents that ensure both parties know what to expect from each other, and what steps will be taken should a disagreement arise. In order to be valid and enforceable, a contract should be clear and specific, meaning all terms and conditions should be spelled out and agreed upon by both parties. People signing the contract should be 18 or older, deemed competent and of sound mind, and neither should be coerced into accepting its terms.
Creating Business Contracts
There are a few key elements that absolutely need to be included in a home-based business contract in order to make it valid, notes Ironclad. Clearly state what you’re offering and what the cost is, the date of delivery, the payment terms, and provide an expiration date for the contract. Stephenson Harwood LLP points out that you should also agree on how you will try to resolve any potential dispute or breach of the contract beforehand by including a dispute-resolution clause. Spelling out the rights and obligations of each party in detail will help resolve potential disagreements without having to fight them out in court.
When both parties have agreed to the terms of the agreement, everyone will sign the contract. Your small business should have an invoicing process in place that will allow you to get paid in a timely manner. You can use an invoice maker to help you generate professional invoices by creating templates with your contact and payment information. You’ll be able to customize your template for each client, keep track of due dates and even send reminders when a payment is due. To get paid promptly, keep terms clear and concise, invoice immediately after services have been completed, and allow your customers to pay you online.
Negotiating Business Contracts
It should go without saying, but make sure you’re dealing with the right person when negotiating a business contract, that is, someone who has the authority to make informed decisions and whose signature at the bottom of the document will be legally binding.
Come to the negotiating table prepared with thorough research and numbers to explain how you came up with your offer and pricing, and be ready to listen to the other party and understand their motives as you start negotiating. Prioritize key objectives for your business, starting with the common interest that brings your company and your client, vendor, or service provider together. This will help you come up with mutually beneficial terms when you draft your contract.
Don’t rush the negotiations, and don’t forget to include a non-disclosure or confidentiality clause to protect your trade secrets, your proprietary software, and your client list.
Preparation and planning go a long way when it comes to the success of your home-based business. Drafting and negotiating mutually beneficial contracts with suppliers and clients will help you keep running your company worry-free. Take time to do your research and listen to the other party in order to ensure everyone is satisfied with the outcome.
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