Creating a business agreement is one of the most crucial aspects of every deal. Not only does an agreement legalize the deal, but it also acts as a source to resolve any conflicts that may arise.
However, in order to make your helpful agreement, it is essential that it does not include any mind-bending legal gibberish. Instead, it should be simple, easy to understand and include the best interest of both parties.
In addition to these, there are numerous other guidelines that you must follow while creating a legally valid contract.
So, let’s shed some light on what these guidelines are!
- Always Prefer Written Agreements
There are numerous forms of agreements, such as oral, verbal, handshake and written. All these are legally valid and bind the parties involved. But, it could be challenging to enforce these agreements in certain situations, especially in front of the court. Therefore, you must prefer a written contract only.
They are less risky, mention roles and responsibilities clearly, and help resolve any confusion or misunderstanding.
- Deal With The Authoritative Person
Whenever you negotiate an agreement, make sure that you can deal with the authoritative person and not their junior or employee. Also, keep a corporate lawyer always with you while negotiating. They have thorough knowledge about the laws of the country or province; thus, they can guide you throughout the process.
Dealing with the authoritative person will ensure that there is no miscommunication between both parties.
If you are not sure whom to contact, you can ask about the owner, CEO, or COO. Generally, they are the right people to negotiate an agreement with.
- Identify Each Party Correctly
In addition to negotiating with the right person, you must also identify each party correctly. Believe it or not, but many people often make the mistake of identifying. For instance, if the business is an LCC or corporation, it must be recognized as an Inc. or LCC suffix. And not by the name of people.
Using the correct legal name in the contract clears the confusion related to responsibility and legal obligations.
- Right In Detail All The Rights And Obligations Of Each Party
The contracting body must include every detail regarding the rights and obligations of each party. You must not leave anything out, even if it’s discussed verbally.
In case you forget to mention something in the contract, you can always make amendments to resolve the issue. Or, if the agreement hasn’t been signed yet, you can also handwrite it.
Also, don’t forget to mention the circumstances that terminate the contract. Ensure that the agreement is written in simple language, excluding jargon and includes every detail.
- Keep It Confidential
Lastly, keep the contract confidential. These contracts tend to include sensitive information, so they should contain mutual promises to keep the information strictly confidential. You can also add the terms for breach of confidentiality to protect the information.
Wrapping It Up!
These are the things that you must keep in mind and follow while creating business contracts. Also, carry out all these activities in the presence of a corporate lawyer to ensure that everything works out smoothly. They can also help you review the contract to ensure that your organization’s rights are protected.