Why You Should Have a Basic Contract Template for Services or Goods Provided
At one time, transacting business was easy. Two people agreed to make a trade, and both parties honored their word. But in the 21st century, people are all too aware of the stories of deal-breaking and lawsuits that have taken place all around them. In business, contracts are important because they outline expectations for both parties, protect both parties if those expectations aren’t met and lock in the price that will be paid for services or products agreed to between the parties. Having a written business contract means that everyone knows what he is supposed to do and when, and makes it easier to resolve any disputes that might arise.
Sometimes, parties may be reluctant to draw up a contract because they’re in a hurry to finalize a deal. This is a bad idea. Taking on a job or receiving work with no formal contract in place is a disservice to all involved. Although writing up a contract may slow down the process of completing a deal or cause some tension in the short term it can help things go smoothly and prevent future problems.
A contract is a written agreement between two parties that details the terms of a transaction. In a business, it generally states the work that will be performed, along with important information like due dates and costs. It can be easy to make your contract far longer and more complicated than it needs to be, but it’s best for everyone to try to keep it simple. Still, your simple business contract terms should at least include the following:
- Full scope of work to be performed, including all deliverables.
- Payment terms: the price for services, products or item being purchased. There should also be a clause around late payments, should those occur.
- Deadlines: General timeline or, if possible, exact due dates for each milestone. This can include a payment schedule if not already outlined.
- The circumstances under which the contract can be terminated and how that will be handled.
- You should always include additional provisions that may apply to your transaction like: State where the Contract is enforceable, what happens in the event of a disagreement, limiting liability of the parties, including a non-disclosure clause or non-compete.
If you can afford an attorney, it would be wise to have one look over your contract to make sure you’ve covered everything. Once you have the initial draft, you should be able to simply update it with all of your clients.
Protecting Both Parties
Although having expectations in writing increases the odds of success, it also makes enforceability easier. Simply knowing it’s in writing can put pressure on all involved parties to meet their obligations on time. The service provider will probably even routinely check the contract to make sure the work is progressing as agreed. If an issue arises, having the agreement in writing will make enforcement much easier. If the client decides to work with a different agency halfway through the project, the provider could take legal action to be paid for work performed. On the other hand, if the service provider performs poorly, the vendor will have legal protection against paying for the work.
Closing the Contract
Hopefully, you’ll never have to take legal action based on the contract, which means the project will end and you’ll move on to the next project. Written contracts require signatures to be valid. Drafts may not be legally enforceable. Both parties should keep a copy of the contract on file for several years in case a later issue should arise. You’ll also have the template that you can tweak based on the lessons you’ve learned from previous projects.
The information provided on this post does not, and is not intended to, constitute legal advice; instead, all information, content, and materials available on this site are for general informational purposes only. Users of this website should contact their attorney to obtain advice with respect to any particular legal matter. No reader, user, or browser of this site should act or refrain from acting on the basis of information on this site without first seeking legal advice from counsel in the relevant jurisdiction. Only your individual attorney can provide assurances of applicable law or appropriate counsel to your particular situation.
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The undersigned Buyer agrees to buy and the undersigned Seller agrees to sell, upon the terms hereinafter set forth:
1. On the following terms. Purchase Price shall be: $__________.
2. Warranty. Seller shall convey to Buyer ownership of items free and clear of all liens and encumbrances not excepted by this contract. Seller agrees that is has full ownership and warrants against any claims made by third parties.
3. Taxes and Assessments. At closing, Buyer shall be responsible to pay on the purchase price all taxes, including penalty and interest, if any, due as part of this transaction.
4. Miscellaneous. Buyer has examined all property involved and, in making this offer, is relying solely upon such examination with reference to the condition, character, quality and improvements and fixtures, if any, and understands that the property is being purchased in AS IS condition. This contract constitutes the entire agreement and there are no representations, oral or written, which have not been incorporated herein. Time is of the essence of all provisions of this contract. All representations, covenants and warranties of the parties, contained in this contract, shall survive the closing.
5. Closing and Possession. This contract shall be performed and this transaction closed on or before , unless the parties agree in writing to an extension.
6. Additional Provisions, Terms and Conditions are attached on the Amendment attached to the Contract.
The undersigned Buyer agrees to the terms herein and acknowledges the receipt hereof:
The undersigned Seller agrees to the terms herein and acknowledges the receipt hereof:
AMENDMENT TO CONTRACT
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