Business Contract Basics
What You Should Consider in Key Business Contracts
The truth is you make contracts every day and don't even think about it. When you hand your money, debit card or phone to the person at the coffee shop and walk down to the end to wait for your drink, you have, in probably less than 20 seconds, made a contract that in exchange for your money they will give you coffee.
In your business, there are countless contracts that are similarly straightforward- your routine purchases, subscriptions, etc. And there are some that are not necessarily straightforward but over which you have very little control- your phone and internet services, for example, or the "clickwrap" agreements you must accept when buying software or software subscriptions.
There are other areas, however, where it is important to pay attention to your business contracts, both to protect yourself legally but also to make sure they are accomplishing your business goals in the transaction. Having a business lawyer review your agreement can help make sure you are covered.
Contracts With Customers or Clients
Surprisingly, though this is one of the most critical set of relationships in your business, many small business owners give little thought to how they are documenting their terms of engagement with customers. If your business involves retail transactions, like the coffee shop example, in which you are contemporaneously exchanging a product for the payment of money, you are obviously not going to slow down that transaction by signing a contract every time you sell something. But if what you sell or provide is any more complex than that, you should consider documenting the terms in a contract or agreement. It doesn't have to be complicated, or dozens of pages long, but you want to be sure you have covered the basics:
- How you get paid and what are your rights upon nonpayment
- What it is you are agreeing to provide or do
- What is the expected time frame for providing the product or service
- What is the customer supposed to do if they think you haven't done what you agreed to
- When and how can the relationship end
- Do you want an agreed way to resolve disputes (arbitration or mediation, or a specific court).
Contracts With Vendors
If you have a vendor you can negotiate with (examples include people providing website, marketing, design, recruiting, or other customized services), you should cover the same bases as with customer contracts, but also:
- How long is your commitment to them
- What are your expectations in terms of deliverables and rights to terminate or renegotiate if those expectations are not met
- If they are creating content or other materials for you, who has the right to control and use those materials after the contract is over.
Contracts With Business Partners
Contracts With Business Partners
Many small businesses are involved in numerous kinds of partnerships, ranging from a formal partnership between co-owners of a business to informal alliances in which two or more separate business team up to take advantage of a business opportunity. Whether or not each of these relationships rises to the level of a "partnership" under the law, many expensive and disruptive disputes have arisen due to lack of clarity about the scope of the relationship when the agreement is first reached. Some things you want to make sure are clear and documented in a contract:
- Who makes the day to day decisions, and if you have a 50/50 relationship what happens if there is an impasse
- How are major decisions made
- What happens if one of you wants out and the other(s) want to continue the venture
- Who owns the assets of the venture if it terminates (including customer relationships, goodwill, and intellectual property).
How slnlaw Can Help
Getting a business lawyer involved with your contracts does not mean you are doomed to drown in densely-worded, incomprehensible legal documents. We understand that your contracts are not just legal documents but documents that can help set clear expectations- that means they need to be readable by regular people. We can help make sure you have the essentials documented, so that you can do what you went into business to do without worrying about ambiguities in one of these key relationships.