Wednesday, September 16, 2015

Ten Part Series on Starting a Business - Part 7

Contracts and Agreements

As a business owner, you will no doubt require contracts and agreements from time to time with customers, suppliers, landlords, sub-contractors, and others.  Though some contracts, particularly with government agencies, can make you a little crazy with legalese and sometimes strange requirements, many contracts can be simple and straight-forward. 

In order to be valid, contracts must contain the following ingredients:

1.      Parties must be in agreement

2.      Something of value is offered and accepted

3.      Usually the contract is in writing.  Though oral contracts are possible, in business it is often smarter to make sure everything agreed to is in writing in order to protect all involved parties.

Though the word contract conjures up weird legal language in our minds, legalese is not a requirement.  Do make sure that the agreement is clear and as specific as possible as to what each party is expected to do in order to fulfill their duties under the terms of the agreement. 

Agreements will include the thing of value for the offer.  For example, a contract for website design might offer a complete website for “x” amount of dollars.  A barter agreement may offer housecleaning in exchange for room and board. 

How to begin?  Many standard contracts are available on the internet, at the library, in office-supply stores, and in many other places.  Modify it according to the needs of the specific agreement.

Be sure to include the following:

·        A title or something that shows clearly and concisely the use of the contract.

·        Names and addresses of the parties involved in the contract.

·        What each party will do under the terms of the contract

·        What will be exchanged (i.e. money for services provided)

·        Payment arrangements

·        Warranties, and how breach of contracts will be addressed, including which state’s laws will apply

·        Whether or not the contract may be transferred

·        The term of the contract

·        A termination clause, if appropriate

·        Signatures and dates

It pays to be thorough when writing a contract.  The more all parties are clear as to their responsibilities in a contract, the less likely any conflict will ensue. 

Kim Luedke is Co-owner of
ProfessionalEdge Associates, offering a wide range of marketing and support services to businesses that want to increase their success, but aren't in a position to add to their staff.