Contracts are an essential part of any business. As a small-business owner, you need to understand some contract basics to ensure that you are entering into legally binding agreements. If you don’t think you need to put your agreements in writing, you may be headed for trouble.
Contracts do not have to be written in legalese. In fact, clear terms written in plain language make the best contracts. The three elements a contract needs to legally bind the parties are offer, acceptance, and consideration. If you are purchasing services, the vendor offers those services to you. You accept the offer, and your payment for the services is the consideration. Business transactions are rarely that simple, but every contract is built on that foundation. A written contract ensures that all the elements are in place and everyone knows and agrees to the terms.
A written contract gives you protection if a disagreement arises. The contract should state that both parties intend to be legally bound and that they are competent to make the agreement. If the language is not clear, contract disputes McAllen TX are more likely. Despite your best efforts, you could encounter situations where the other party does not hold up their end of the agreement. This is called a breach of contract. Without a written contract, it is more difficult to prove.
Business is all about relationships. You may think that making a deal with a handshake builds trust because it shows that you can be taken at your word. Frequently, however, verbal agreements are incomplete. The negotiation process for a written contract can unearth questions that you did not consider. Finding and resolving those issues upfront shows that you are thoughtful and committed to the deal. A written contract also sets clear expectations for each party. Consistently meeting expectations is a great way to build business relationships.
Making sure that your written contracts have straightforward terms in understandable language will help grow your business.