A business contract is a written contract between two or more businesses setting out the terms of their agreement. Many of the documents on the LegalVision database are business contracts, including the Service Agreement, Contractors Contract and Sale of Asset Agreement.
It’s an unfortunate fact that many small businesses enter into contracts with suppliers, customers and other associates without putting pen on paper. Oral contracts are certainly binding, but their terms can often be disputed – you don’t want to end up in a “he said/ she said” scenario. It’s therefore very important that you enter into a written business contract. Set out below are 4 important steps to take, which will help ensure you end up with a top quality business contract which satisfies all your needs.
1. Work out who will draft the business contract
It’s important that work out the details of which party will create the business contract. If you can, it’s a good idea for you, or your solicitor, to take the lead on this. This ensures that you maintain control over the document and can guide the drafting process in a manner which is more favourable to you. You will need to set clear rules in relation to negotiations, generally trying to ensure that you spend as little time as possible in negotiations (in order to save both time and money).
2. Make sure the basics are covered
There are a few basic elements that any business contract should include; these include (i) the date of the agreement and the date on which it ends, (ii) the names, addresses, contact details and ABNs (if appropriate) of the parties and (iii) the actions both parties will perform (including payment, where necessary).
Additionally, you will need to be clear on which state laws govern the agreement.
As you can see, the above elements will be in each business contract you’re currently signed up too, including Employment Contracts, Contractor Contracts, Sale of Business or Sale of Asset Agreements and Partnership or Shareholders Agreements.
3. Consider the optional extras
There are a few additional elements you may wish to include in your business contract. A termination clause can be very handy to have – it might allow you to get out of the agreement in certain circumstances (of course it may also apply to your counterparty!). Contract law is very versatile, and although there are some restrictions, you can agree on a huge number of issues with a counterparty and insert them into your agreement.
4. Consider getting legal advice
It’s always a good idea to have a lawyer review any business contract you’ve created, even if using customisation software such as LegalVision’s. A lawyer will be able to give you advice on issues which relate to your very specific circumstances. The good news is if you create a LegalVision document and have a contract solicitor in the LegalVision network review it, the cost will be very low as our lawyers are all very familiar with our documents!