Business Contracts: The Nitty-Grittiest
The Oxford dictionary defines a contract as a written or spoken agreement between two entities, enforceable by law. In business, contracts are the enemies we love to hate. But business deals made in casual ways, say with a handshake over a coffee break, usually end in shambles.This is where law and order through business contracts come in to save the day.
The Legal Procedure
Whether it is taking paydayloans, adding a partner to the business or leasing company resources, legal binding through a contract is essential in making valid the aforementioned undertakings.
It is most advisable to use the services of an attorney in drafting a contract between two parties. The two or more entities have to qualify to be privy to the contract, meaning they should be adults (except in rare cases where a minor is involved). They should be mentally sound, too, and not under the influence of intoxicating substances when signing the contract.
A business contract, usually a written agreement, clearly states the terms and conditions imposed upon the two entities. It states the contractual responsibility of each party, the considerations, deadlines, and timelines of various factors. It also delineates the conditions that would cause the contract to be terminated. Here are some factors that can lead to the termination of a business contract:
- Completion of the A contract is terminated when all obligations are accomplished by both parties.
- Non-performance. This is when an individual fails to deliver on a responsibility outlined in the contract.
- Breach of contract. In this case, an individual intentionally goes against the terms and conditions agreed upon.
- This is another form of breaching the contract, whereby a party to the agreement acts illegally or misrepresents the terms of the contract.
- Prior agreement. In some cases there is an earlier written agreement that says that if a specific reason occurs then the contract will be called off. A written notice has to be produced as proof of the agreement.
The Pros and Cons of Business Contracts
There are two sides to the coin that is business contracts.
On one hand, business contracts do contribute largely to the success of a company. This is because they minimize the risk a company or business faces in its operation. These include unnecessary liabilities and legal action, such as being sued. Through the terms and conditions that are legally binding and enforceable by law, every party involved sticks to its lane and delivers its part. A contract also provides clarity and guarantees confidentiality on the undertakings of a company so that no one is left in the dark. The written agreement acts as proof of details whenever the need arises.
The dark side of business contracts is that they can take a lot of time and money. Many hours that could be directed toward other profit-generating activities are spent in the negotiation process and the drafting of the contract.
In general, business contracts are a necessary evil. The secret is to get your facts right, know what you’re agreeing to, and keep your end of the bargain.