Business contracts can be viewed as a legal document and as a promise between two or more people or companies. Generally, it is a written document or oral promise between two or more people or companies, offend referred to as Contractual Parties or simply Parties, who agreed on certain terms, rights, and obligations.
It is our belief that it is always better to put everything in writing and prevent any misunderstanding with your clients or business associates.
A contract may be used to define various transactions, such as the sale of land or goods, or the provision of business services. Whether you are a sole proprietor, digital nomad, freelancer, blogger or you manage a company, a contract is something you will undoubtedly come across. Therefore, there are several things you need to know before drafting and signing one.
Rights versus Obligation
When drafting or signing a contract be sure to stipulate and to carefully read what are the rights and obligations of each Party. You need to make sure that every Party knows when and what they should or should not do.
This means to stipulate things like payments, deadlines, exclusivity, the scope of work, confidentiality clause and any other specific term or condition that is important to you. Simply put, write what you give and what you get.
Even if some terms cannot be stipulated in the contract and will be stipulated additionally, the state in your contract when will be those terms stipulated and how will be stipulated – e.g. Annex to Contract. Small details are everything in business cooperation.
Define how will you solve misunderstandings
It is important to define what will happen if any Party breaches the contract. Contractual penalties or liquidated damages should be part of the contract upon a specific breach by one Party e.g. late performance. These can be stipulated as a hold of advance payment, payment of compensation or termination of a contract.
Additionally, you can stipulate that Parties will first try to settle the differences amicably and only if that does not give desired results Court or Arbitration proceeding will be in order.
Court and Arbitration Jurisdiction
Court Jurisdiction must be stipulated in the contract, especially if Parties are from different cities or countries. In the 21st century, contractual Parties are often from a different continent. To settle all problems among Parties it is substantially to define which Court will be competent.
Bear in mind that you can even stipulate International Arbitration to be competent. In case of any contract breaches or problems in cooperation between Parties, not all misunderstandings can be solved amicably. Court and Arbitrations should be used as a last resort when dealing with difficulties.
Be clear with exit terms
Although business cooperation can begin on grounds that suits all Parties, there comes a time when previously stipulated terms and conditions don’t work anymore. Therefore, your contract should contain details such as notice period and how one Party should notice other Party regarding contract termination.
These terms can also include compensation or competition or some other clause. By stipulating this you will avoid any unpleasant situations and possibly keep good relations with your clients or associates. Just because you are terminating this contract that does not mean you will never cooperate again.
Consult with Professionals
If you are not sure whether something should or shouldn’t be included in the Contract consult with professionals. This can be either an Attorney at Law, Lawyer or Legal consultant. If you want to know more about contracts or you need help with drafting, reviewing or translating one, Asst Office is here to provide you with the best solutions and pieces of advice.