Understand that contract
Contracts can make or break a small business. People usually realise the terms and conditions only when the contract is either being breached or if one party sues the other. Fine print especially could be harmful to the non-discerning or great top contract writer.
What is a contract?
It is an agreement entered into by two or more business parties. It binds them to performing or providing specific goods or services in exchange for some form of compensation.
Make sure you sign a clear contract to protect your business interests in any business deal you make.
Why do you need a contract?
Because it is an essential legal document which can be used in court to decide which party is responsible if one party believes they are dealing with a breach of contract.
What is a breach of contract?
A breach of contract occurs when one party fails to meet the obligations according to the terms of the contract. Another situation which can be regarded as a breach of contract is when one party makes it impossible for the other party to perform this obligation.
A breach of contract also occurs when one party acts contrary to the intent of the contract or refuses to perform. If the parties cannot reach any consensus to resolve the problem, a lawsuit is unavoidable. Once a breach of contract reaches the lawsuit stage, the court will decide the outcome.
It becomes easy for the court to make a decision if there is a signed contract. Although a verbal contract can be used in court to argue in the cases of a breach of contract, they don't carry enough weight as a written contract.
A small business owner needs to have, and sign a binding contract in any business deal. It does not matter whether you get into a deal as a service provider, a client or you need a mutual manifestation of agreement to the same terms.
Many people usually sign contracts without really understanding the contents of the contract. Signing a contract without reading and understanding it is like signing a blank contract where the other party can write terms and conditions that protect him or her alone.
Before signing any contract, make sure that your interests and concerns are covered.
Many small businesses have closed down due to a shortage of funds which resulted from unpaid bills by clients or contracts cancelled prematurely. Don't let it happen to you. Make sure everything in the contract is clear.
If you don't understand the terms of the contract, don't sign until everything is explained to you and you understand them. Ask questions until you are satisfied. Don't be afraid that the other party would feel that you don't trust him or her.
Remember that a contract is a binding document which can be enforced in court if some disagreement arises. You don't want to bind yourself to something you don't agree to or give away rights you didn't intend to give up.
Generally, a standard business contract is simple and spells out each party's rights. Eliminate all vague, ambiguous and confusing statements from a contract. Ambiguous statements can be used against you in court.
A contract should also contain provision for dealing with obstacles, failures and even betrayals, no matter how implausible such things may seem at the time.