It would certainly be easier if the world operated on a handshake and a promise, but as we all know, people sometimes change their minds, and you never know what might happen over time. For those reasons and more, the business world is deeply reliant on the written legal contract. Discussing matters verbally is usually imperative beforehand, but if you don't get the details in writing, they may not be legally enforceable later.
The most common business contracts tend to be:
- Partnership agreements
- Employee agreements
- Non-disclosure agreements
- Licensing agreements
- Promissory notes
- Purchase and Sale Agreements
In addition to industry-specific agreements, these types of basic contracts can be crucial to the business you are engaged in, as is an experienced business attorney advising you along the way. At HMS Law Group, we provide crucial legal guidance to clients in creating business agreements, preparing forms and contracts, and helping you both understand and deal with other documents that may be presented to you by other parties.
The basic provisions you should expect to see in any business contract will answer the following questions:
- When will the contract begin and who is involved? The date that all parties are entering into the agreement should be included, along with the names of all involved in signing the contract. All names should be spelled correctly and corporate designations should be included such as Inc. or LLC.
- What is being agreed upon? The contract should clearly state all the promises and expectations being agreed on. All items or services to be exchanged or sold should be listed. Payment information should be clear in terms of who expects what from whom-and when. Prices should be settled and clearly outlined.
- What happens if there is a breach of contract? Again, this is crucial information in any contract, laying out what would be cause for such an issue-such as services or payment not delivered on time. You can also go into further detail discussing what would happen if attorney's fees were involved in a resulting dispute, as well as how resolution could be reached alternatively.
- How long do the parties want this agreement to be valid? Agree on a termination date whether for services to be rendered or for the longer term if this is to be an ongoing relationship. This should also allow for an ‘out' if one party does not fulfill their end of the agreement, meaning that the contract is no longer good.
- Does everyone consent? All parties must formally indicate that they consent to the entire agreement with their signatures. A notary or witnesses may not be required, but it's always a good idea just in case an issue regarding legality of the contract arises later. This varies by state in terms of requirement.
While contracts may be required for any number of agreements between individuals and entities in business, they are an important beginning to any deal, no matter how large or small. This legal structure normally allows for business to stay on track-but when promises are broken, it's extremely helpful to have a signed and notarized contract on your side in court.
Rodney Moy at HMS Law Group has extensive experience in helping clients with their business needs, to include working with them in forming corporations, partnerships, drafting and helping to negotiate contracts, along with assisting in any dispute resolution.