A business contract is a written record of the agreement that you have with a service provider, a vendor or a customer. Those who commit their agreements to writing make it easier to enforce their agreement if either party fails to follow through on the arrangements.
Of course, enforcing a contract through litigation is a lengthy and often frustrating process that may damage your working relationship with the other party. It is preferable to instead carefully negotiate specific terms in your business contracts so that the risk of a breach is lower.
What kind of terms may you want to include in your contracts?
Clear terms for the transaction
How much money will the party securing services or goods pay as a deposit? How quickly will they pay the balance due after receiving the goods or services? What kind of turnaround time for services or product delivery can the customer anticipate?
Being very specific about what each party is going to give and receive as part of the transaction outline in the contract is a key element, as it ensures that there are shared expectations and it makes it easier to enforce those expectations in court.
Payment or penalty clauses
If the other party falls into arrears by failing to make payments or deliver goods, there could sometimes be a financial penalty involved under the terms of the contract you negotiate. Addressing late payment fees and similar charges that your company will impose for failure on the part of the other party will incentivize them to follow through on their obligations and compensate you for any frustrations if they reach the contract.
Conflict resolution clauses
Do you want to attempt arbitration or mediation before going to court? Do you want to have a sit-down meeting with all interested parties present prior to taking legal action over a contract dispute? Outlining the steps you want to take before litigation can help streamline the process of resolving conflicts later.
The more information the other party will have about how your company does business due to your contractual relationship, the more important it may become to protect your business with a confidentiality clause. Keeping your business operations or trade secrets confidential can be key to maintaining your profit margins or your current niche of the market.
Adding the appropriate terms to your business contracts will help set your company up for success with each new transaction.