5 things you
need to know
about
Commercial Contracts
- Every business has contracts. A contract is a legally binding agreement that involves two or more parties agreeing to exchange something of value, such as money, services or goods. Most businesses enter into new contracts each day — including with customers or suppliers.
- A business can enter into contracts in many ways — including by email, orally or even through conduct. If you run a business, it’s essential to understand what you’ve agreed with other parties, so that you can effectively manage your contractual rights and obligations. For this reason, it’s best practice for a business to set out its contracts in writing.
- If your business enters into the same types of agreements on a regular basis, it’s a good idea to use standard form contracts or master agreements. Standard form contracts help if you offer a standardised service to all of your customers. For example, your business might have standard sales terms and conditions for all customers. Standard form contracts have great benefits — but different rules may apply to them, so it’s wise to involve a contract lawyer to avoid including terms that might be considered unfair. Master Agreements can be used when you want to enter into an agreement with a business that will order goods or services from you on an ongoing basis. They help you set the legal terms for your arrangement without needing to enter into a new contract every time they make a request from you. This makes things much faster and easier for you to establish strong business relationships.
- A written contract is made up of a number of terms or clauses. These clauses set out the contractual rights and obligations of the parties. They include terms that are specific to each particular transaction or relationship (commercial details), as well as boilerplate clauses, which address general legal issues that commonly apply to all contracts of that type.
- In most cases, it’s possible to negotiate the commercial details of a contract before asking a lawyer to get involved. The lawyers can then negotiate the legal points and finalise the business deal in a written document. It’s important to work with a lawyer who has experience with the type of contract you need. For example, you should talk to a leasing specialist about your lease, or speak with a franchise lawyer if you need to draft or review a franchise agreement.
