How to write a contract. To have a business contract that is in compliance with state laws, you’ll need to have a well written and organized contract with 3 essential elements (Offer, Acceptance and Consideration). Learn more about the 3 elements to include in a business contract.

In this article, we will be focusing on the first part rather than the latter. It’s essential to know how to write a business contract and to be able to recognize a poorly written business contract. Why? Because a contract is the number one way to legally bind a business deal and to protect your physical and intellectual property as well. Who wouldn’t want to do that? So let’s dive into the basics of writing a business contract.

Have a Physical Contract

While there is such a thing as a verbal agreement, it’s highly advised that every agreement is done with a physical contract. This contract needs to be written clearly so that all responsibilities for both parties are well defined in case you ever find yourself in a legal disagreement. Having a clear business contract can help protect you and your business, but also save you time and money in court. If a verbal disagreement was taken to court, it would become a much lengthier battle and could cost you quite a bit more money. Depending on the state, this verbal agreement may not even be recognized at all.

Be Clear Defining Each Party

Make sure to name each party using its full legal business name. If this is with an individual then make sure to use their full legal name. By using each party’s appropriate name, they are then properly held to the agreements defined in your business contract.

Don’t Beat Around The Bush

Sometimes saying less is more powerful. At times you may see contracts full of passive tones and filled with useless jargon. Think back to those ridiculous contracts that are jokingly mentioned in tv shows and movies where they’re composed of a three-inch stack of paper. You want to avoid that. When writing a business contract, it can be smart to use simple and clear sentences.

No Middle Men

It might sound a little harsh at first but the last thing you want or need is to be communicating with someone in the middle that can’t make executive decisions or has to seek constant approval from the bosses up above before a decision can be made. Just ask to deal directly with the top.

Clearly Define Each Parties Responsibilities

Make sure that all obligations for each party are well defined and laid out so that each party going into business can properly hold their end of the agreement up. This will also allow for any business disagreements to be handled in a more timely manner.

Let’s Talk Money

Now in most cases, when a business contract is being written, money is involved. So make sure that the flow of money is clearly defined. How will the payments be done? On a monthly basis, or is money only paid when a project is completed? Either way you decide to go, be sure to include that in your contract. State whether or not payments can be paid for in full or when satisfaction is attained and decide how you want the payment method (cash, credit, or check). All of this needs to be clearly defined.

Define How Disputes Will Be Handled

Next, you want to define how each party will handle disputes. In a perfect world, this aspect of the contract will never come into play. But if it ever does, both parties will know exactly how to handle the process. Be clear on where these disputes will be handled and who will be awarded attorney fees, deposition fees, and filing fees.

What Can Terminate Your Contract?

Now, this feature may not be right for all business contracts, but if you would like to layout conditions on what can terminate your contract, then feel free to do so. This way if the company you’re partnering with starts to fail deadline after deadline, you can terminate your contract without any legal ramifications.

Picking a State

When putting together a business contract with another company outside of your state, you’ll need to pick what state laws you want to be enforced in regard to your contract. Keep in mind you will need to specify where you will want to meet in case any legal action is needed. Look into the laws of each state and pick what is best for your company.

Keep Everything Confidential

When you are finished signing contracts and work begins, you may find yourself seeing aspects of how a business handles their day to day operations that aren’t public and vise versa. So it’s important to have a clear understanding of confidentiality in your business contract. This way, both businesses don’t have to worry about their secrets getting out.