Using Contracts in Your New Garner, NC Business
Gone are the days when you could rely on handshakes to make business deals. Sure, specific deals and commitments can still be handled that way, but the overwhelming majority of agreements in the business world are now written down and signed.
Learning how to create and manage business contracts is one of the most crucial skills you can learn for your company. No matter how hard you work to come to an agreement, and no matter how good the intentions of both parties, things can go wrong.
Someone can change their mind, conditions may no longer work for a party, and people may lie. Without contracts in place, your relationships with clients and other organizations can quickly go south.
Don’t let this happen to your company! Below, the Garner Chamber of Commerce discusses the ins and outs of using contracts while managing your new business.
Why You Need Business Contracts
You may already have an idea about the advantages of business contracts, but let's dive a little deeper into why you should prioritize them in your operations:
Protection for Both Parties
By nature, contracts are designed to safeguard you and your client. The very act of agreeing to a contract's terms and signing the contract is a preemptive step to prevent potential disagreements and mitigate damages to your relationship. A contract can also serve as a reminder in case one or both parties forget the terms agreed upon or fail to uphold them.
You can use contracts to outline the rights of both parties. Say, for instance, that you run a digital marketing firm. If you take product photos for a client, you’ll need to clearly specify the rights that you retain and those the client can purchase.
If you display the images publicly and your client is uncomfortable with it, it could cause tension and other issues. A business contract can determine whether you keep the rights to the photos, whether the rights belong to your client, whether you will sell the rights through a fee, etc.
One of the most fundamental benefits of writing business contracts is that it helps to establish clear expectations between both parties. To execute a contract, you and your client must agree on clear and concise terms that will determine how each of you perform your duties.
You and your client will know precisely what to expect during and at the end of your relationship because everything will be written down. And you can easily return to the contract if you meet an obstacle or disagree about the terms you settled on.
They’re Legally Binding
Contracts are legally binding, meaning that once you and the other party have signed, each of you is held to be specified terms of the contract. If either one of you violates the terms, legal action can settle the dispute. You can take your client to court and vice versa if the contract is violated. This provides you and your client with a safety net should any negative scenarios occur.
Best Business Contract Tools
As you learn to create business contracts, you'll quickly realize how helpful certain tools can be in the process. For example, if you want to develop a new contract using portions of an existing contract, you can do so by using this PDF page extract tool. You simply select your desired pages, choose “Extract,” and launch a new modified PDF to create the new contract.
You might also benefit from investing in cloud-based accounting tools to maintain an accurate picture of your company's financial standing, which is critical information when negotiating business contracts. Search online for accounting software to see the best options on the market. Some platforms will let you manage your company's money through a single interface and provide real-time cash flow insights to use as you negotiate.
Furthermore, contract management software is also worth researching. Platforms like DocuSign, ContractWorks, and PandaDoc can simplify the entire process, from creating to negotiating to managing your contracts.
The Fundamentals of Creating Business Contracts
Many factors go into making an enforceable, straightforward business contract. But here are a few practical tips to get you started:
Writing Customer Contracts
When drafting a contract with a customer, you may be tempted to use esoteric legal terms. Though they can have their place, it’s better to state the terms of the contract in clear, unambiguous language. In addition to the scope of the contract, you should also make clear the state in which the contract will be enforced as well as the conditions for terminating the contract. If the contract governs the exchange of significant sums of money or property, be sure to have a contract attorney look it over before signing.
Don’t Complicate Matters
Too many business owners (and attorneys, for that matter) believe that you need a certain amount of legalese to make a business contract legitimate. In reality, cluttering your contracts with legal terms neither party understands will make the document confusing and can lead to various problems down the road. Stick with short, clear sentences and numbered paragraph headings that show the readers precisely what's in each paragraph.
Identify Each Party in Detail
Too many entrepreneurs fail to correctly identify the parties in contracts. It's essential to include each party's correct legal name to firmly establish who is responsible for the responsibilities in the agreement. For example, if your contract involves a company organized as a corporation, you should include the business’s legal name instead of the names of the individuals signing on behalf of the business.
Clarify the Details
You’ve heard it said that the devil is in the details, and that doesn't ring truer than with business contracts. The body of your business contract must clearly lay out the rights and responsibilities of each party. Get everything in writing, leaving no detail to handshakes or verbal agreements. Remember that it will be almost impossible to enforce any terms that are not written in the contract.
Negotiating Business Contracts
So, you know the gist of creating an enforceable business contract. But do you know how to negotiate on behalf of your company?
First, understand that it pays to always be professional and collaborative when negotiating contracts. Take time to research your client's goals and ensure they are central to your negotiation strategy. Also, try to size up your client to determine what they might consider a successful or acceptable outcome.
Another tried-and-true negotiation tactic is to think one step ahead of the other party. Develop a strategic response for every possible move your client could make in negotiations so that you can respond quickly. You'll also want to ensure that whoever writes your contract has superb writing skills and is able to communicate with precise and encompassing language.
Moreover, prioritize a win-win situation anytime you negotiate a business contract. And communicate consistently with the other party to ensure everyone is informed throughout the process.
Few things are more charming than an old-fashioned handshake or verbal agreement. But unfortunately, that doesn't get the job done in this day and age.
Consider the importance of creating and negotiating business and customer contracts as you prepare to launch and grow your new company. Invest in any tools that can simplify the process of managing enforceable contracts. And don’t hesitate to hire professionals who can ensure you stay on the right path.
Curious what other local businesses are doing to grow and succeed? Join the conversation at your local Chamber of Commerce!