As a business owner, you create agreements with suppliers, clients and employees on a regular basis. Establishing these agreements allows you to run your operation with consistency.
According to the Small Business Administration, in the U.S., there are 32,540,953 small businesses, and many of these operations rely on formal business contracts to run their operations. The following guidelines can help you ensure the enforceability of your business contracts and set expectations for involved parties.
1. Put agreements in writing
While oral agreements are convenient and applicable in many situations, an agreement that does not get written down can be hard to enforce legally. Whenever you create an agreement with an employee, supplier or client, create a formal business contract you can enforce in a court of law.
2. Outline all important details
Your business contracts should outline all of the obligations and rights of each involved party. If you do not add something important to the original contract, add an amendment to it to protect your interests.
3. Specify termination circumstances
The agreements you have with other parties involved with your business may not need to last forever. Include stipulations for when you can end the contract without penalty. For example, if a client misses too many payment deadlines, reserve the right to end the contract.
Solid business contracts can help you run your business operations successfully and minimize the risk of litigation over a breach of contract. Keep these business agreements confidential and do not overcomplicate the terms of your contracts.