A business contract is a written document that sets out the terms of an agreement between two or more businesses. Many of the documents on the LegalVision database are business contracts. Some examples include the:
Unfortunately, many small businesses enter into contracts with suppliers, customers and other associates without putting pen to paper. Oral contracts are certainly binding, but their terms can often be disputed, and you do not want to end up in a “he said, she said” scenario. Therefore, it is important that you enter into a written business contract so that you have proof of the agreement you made. This will help to avoid misunderstandings and future disputes. This article sets out four important steps to take, which will help ensure that you end up with a top-quality business contract that satisfies all your needs.
1. Work Out Who Will Draft the Business Contract
It is important to work out the details of which party will create the business contract. If you can, it is a good idea for you, or your solicitor, to take the lead on having the contract drafted. Doing so will ensure that you maintain control over the document and can guide the drafting process in a manner that is more favourable to you.
You should also set clear rules in relation to negotiations. These rules will ensure that you spend as little time as possible in negotiations, saving both your time and money. For example, you may want to agree that you will perform all negotiations between each party’s legal representatives.
2. Make Sure the Basics Are Covered
There are a few basic elements that any business contract should include. These are:
- the dates on which the agreement will begin and end;
- the details of the parties (names, addresses, contact details and ABNs);
- any actions each party will perform, including any services that will be provided, payments to be made or goods to be delivered;
- how you will apportion risk and liability under the contract (in other words, who will be responsible if something goes wrong); and
- which state laws govern the agreement.
The above items are the basic elements found within an agreement and are typically in every business contract that you come across.
Continue reading this article below the form3. Consider the Optional Extras
There are a few additional elements that are beneficial to include in your business contract. Some of these may include:
- a termination clause outlining the circumstances or requirements which will allow either party to get out of the agreement early;
- an intellectual property clause stating which parties will own any intellectual property created during the term of the contract;
- a confidentiality clause to allow you to retain control over any confidential information shared with the other party, such as client lists, pricing information and trade secrets; and
- a dispute resolution clause outlining what the parties should do if the contract is breached.
4. Consider Getting Legal Advice
It is always a good idea to have a lawyer review any business contract you have created. Even if you use a legal template such as those found in LegalVision’s online resources. A lawyer will be able to give you advice on issues that relate to your very specific circumstances.
Key Takeaways
When entering into a business agreement, it is important to formalise the arrangement into a written contract so that you have proof of the agreement. It is beneficial to be the party that has the written contract drafted. This is because it allows for more control over the document, and you can seek to draft it in a way that favours your interests. You may want to consider some optional clauses, such as terminations, intellectual property and confidentiality clauses. These will further protect your arrangement and your interests. If you need assistance with drafting a business contract, contact LegalVision’s contract lawyers on 1300 544 755 or fill out the form on this page.
Frequently Asked Questions
It is generally beneficial for you or your solicitor to take the lead on drafting the contract. This is because by doing so, you maintain control over the document and can guide the drafting process in a manner that will be more favourable to you.
There are some basic elements found within an agreement that are typically in every business contract that you come across. These include things such as the dates on which the agreement will begin and end, details of the parties, the actions each party will perform (including services provided or goods delivered), how you will apportion risk and liability under the contract and which state laws govern the agreement.
The agreement may also include a termination clause, intellectual property clause, confidentiality clause or dispute resolution clause.
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