Contracts are legal agreements between two parties. They are enforceable by law as long as they meet the basic requirements – mutual consent, capacity, legality and consideration for starters. When a party breaches a contract, the other party can legally request damages.
Why Contracts are Important for Your BusinessContracts are used for a variety of day-to-day-business operations. From securing property to hiring employees, they protect your company. You can enter into contracts with employees, service providers, vendors, and even your clients. While it may seem friendlier to do business on a handshake, contracts are what protect your company.
Contracts are important because:
- They set a clear definition of the terms of the agreement, each party’s rights and expectations, as well as each party’s obligations. Also, a contract states the penalty each party will face if they choose to breach that contract.
- They prevent any misunderstandings. Handshake deals almost always end in a disagreement, because it is easy to misinterpret the facts or remember the details of what was said a few days later. Written contracts clearly state what was negotiated and agreed upon to avoid these situations.
- Contract terms and specifics are established. A business contract lawyer can help you write clauses that reserve specific rights, specify a term for the agreement, etc.
- Trade secrets are protected. Your business contract lawyer can create a non-compete clause that prevents the other business, individual or party from starting a business with similar products or services to yours.
- It protects your rights.
What Instances Require a Contract?
There are a variety of contracts you may use as part of your business. Some being very simple while others are highly complex and require a notarized signature. Some of the common contracts you may see include:
- Confidentiality
- Employment
- Franchise
- Lease or Purchase of Property
- Purchase of Goods
- Agreement for Work or Services
Why Contract Disputes Occur – and How to Avoid Them
Most contract disputes occur because the terms and conditions of the contract were never written down or were inadequately written. Oral and written contracts are enforceable, but written contracts are what help resolve business disputes out of court. Also, contract disputes often occur because the contract itself was not properly written – and left out important clauses leaving one party vulnerable.
The details and conditions put in a contract are what protect your business; therefore you should always hire an attorney to handle your contract creation. Before you reach an agreement, contact a business contract lawyer to learn about your options and see what additional details should be negotiated before it is put into writing.
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