The Importance of Detailed Business Contracts
When you’re starting a business, you’re learning as you go. However, this doesn’t mean that you shouldn’t do your research and prepare for running your own company. One of the most crucial aspects of being a business owner is getting the right business contracts in place. When you research the importance of detailed business contracts, you’re setting yourself up for success with your exciting new venture.
Need help creating a business contract? Then get in touch with Robin D. Perry. The Law Offices of Robin D. Perry & Associates provide vigorous representation to clients and are a goal-oriented and values-driven firm. We develop creative strategies to win every case, every time and are confident we can help you with your business contract. Reach out to us today to schedule a consultation.
What Are Business Contracts?
Business contracts are legally binding written documents that protect you and other parties, such as your business partner, employees, and vendors. If you have contracts in place, you can set the ground rules for your relationship with another party and ensure that you’re protecting your best interests. They can protect you whether things are going right or wrong with a relationship with another party.
By creating business contracts, you are being proactive about your business’ future instead of reactive, should anything negative happen. For instance, let’s say that you partnered with your best friend to open up a restaurant, but suddenly, they stopped showing up to work, leaving you with the burden of doing everything on your own. However, they still want to collect a paycheck. If you don’t have a contract that’s legally enforceable, then there may be little that you can do.
But if you do have a contract in place that stipulates that if one of you quits, you stop earning a paycheck and lose ownership in the business, then you could take action by removing your partner from the business. You could take over as the sole owner or feel free to find a new partner, as long as the proper language is in your contract.
Contracts not only prevent conflict and help mitigate risks. They can also open up lines of communication from the get-go. For instance, let’s say you’re hiring a new employee, and their contract stipulates that you want them to work 40 hours a week and stay an additional two hours on Mondays and Tuesdays. This may not work for the new employee. They can tell you up front and you can either find a new employee or come up with a solution that’s suitable for both of you. This builds healthy communication right from the start.
If you have a contract in place with a vendor, the vendor will need to deliver goods to you by a certain time and day every week, for example, or else you won’t pay them. If your vendor sticks to this contract, you can generate revenue for your business on a consistent basis. If they don’t, you’re free to find a new vendor who can help you fulfill your goals.
Business contracts can also make your business run more efficiently, demonstrate that you are responsible to possible clients, vendors, customers, and employees, promote compliance, and ensure that you have a paper trail of a certain relationship or transaction.
Even though it may seem like a burden to create business contracts because it takes time and costs money, it’ll save you a lot of money, time, and energy in the long run should something go wrong. When you prepare for the worst, you’re ensuring that your business has a better chance of thriving.
What Kinds of Contracts Do Businesses Need?
Every business is different. Some will require many contracts in order to function, while others can make do with just a few contracts in place. Some of the contracts you may need include:
- A contract between you and your partner
- Vendor contracts
- Employee contracts
- Commercial lease
- Sale contracts
No matter what kind of contracts you create, all of them will serve the same purpose: to demonstrate that something of value was traded, and that all the parties agreed to the terms listed. The essential parts of a business contract include an offer, mutual consideration, details of the transaction, competency, and acceptance.
Some of the clauses that appear in business contracts are:
- Arbitration clause
- Definitions clause
- Confidentiality clause
- Choice of law clause
For example, with a confidentiality clause that appears in a vendor’s contract with your business, your vendor cannot disclose private information about your products to your competitors. If they do, the clause might state, your business relationship will be terminated.
With an arbitration clause, you and the other party agree that you will resolve your disputes with an arbitrator. A choice of law clause allows you and the other party to agree to your state’s laws to interpret the agreement, even if you live in different places. A definition clause includes the defined terms in your business contract.
There could be specific clauses you create based on your business’ needs as well.
Why You Need a Business Attorney
It is never advisable to produce your own business contracts, DIY style, or to rely on oral agreements. These will not hold up in court if something goes wrong.
Instead, you need an experienced business attorney to help you create and enforce business contracts. They will know what kind of language to use and clauses to include, and help you ensure that all parties understand the document and sign it prior to moving forward with your business relationship.
Also, a business attorney could help you if you are facing legal issues with your business and you need representation. Even if you didn’t have established contracts, they may be able to assist you with working out a solution.
Make sure that when you’re seeking out representation, you look for an attorney who has worked with businesses like yours and has the case results to back up their experience.
Before you formally start your business, you need the right business contracts in place. Otherwise, you could be scrambling to save your venture if an adverse event occurs. You want to be protected, no matter what.
Reach Out to Robin D. Perry & Associates
If you need help creating a detailed business contract, then it’s time to get in touch with the Law Offices of Robin D. Perry & Associates today. No matter what, we will fight on your behalf during your time of need. Call us at 562-216-2944 or contact us on our website for a free consultation.