How to Prepare a Business Contract
When starting up a new business, a lot is on your mind – from finding new clients to ensuring you have the necessary inventory and equipment.
Being so preoccupied by the many facets of starting a business, there is a risk that your contract will be underprepared or delivered only verbally.
In this article, Parramatta law firm Arida Lawyers will explore a few items of advice for when it comes to developing a contract.
1. Ensure it is customised to your industry
A contract that is generic runs the risk of being open to interpretation, or not applying to the business dealings that are taking place. That said, the terms and conditions of your contract should remain clear and concise, not jargonistic. This can prevent misunderstandings and also strengthen your legal footing in the case of there being a disagreement. Clarity of language is more than a question of style; it requires a clear understanding of the legal frameworks surrounding consumer law and your industry.
2. Consider the commitments you are making in the contract.
Consider carefully what your contract promises and whether you will be able to meet these expectations, or if the results you are promising may be out of your hands on occasion. Ensure that your timeframes are realistic and achievable. Articulate clearly what you will deliver, without glossing over the details, as this will leave room for interpretation (which is often the enemy of a safe contract). On a related note, master your indemnity clause. There is no room for error here. Also, consider your break free clause – in what set of circumstances can you, or the hirer/buyer, abandon the agreement?
3. Be aware that your hirer may like to dictate the contract.
It may be the case that your hirer or the group contracting you will like to provide the contract. This may or may not be a necessary move – but never put pen to paper without thoroughly assessing their contract. It can be hard to spot the complexities and the potential consequences of taking on a contract. A legal services team can provide you the necessary clarity before taking the plunge.
4. Make payment easy and reference GST
Make sure that payment methods and deadlines are clearly articulated in the contract. Ensure there are no obstacles to timely payment on paper, as these may be used to justify late payment at a later stage. Also, ensure you state whether GST will be charged, and whether listed prices are inclusive or exclusive of GST. Stipulate how payment can be made – full payment up front, part up front and the remainder on completion, or otherwise?
5. Don’t put your Intellectual Property on the line.
If you are developing or creating something as part of the agreement, make sure it is clear in the contract who the intellectual property belongs to. You may have rights above and beyond the contract but it is also valuable to capture these in writing with appropriate clauses.
Establishing a contract that protects your business is a complex task. You may wish to consider working with a lawyer to develop a dependable contract that protects your interests, especially because a contract does not exist in a vacuum but still needs to factor in contract law, consumer law, and debt recovery law.
This article provides general information relevant to our expert services. It is not legal advice and should not be relied upon as such. If you are seeking legal advice, you should contact us for a free initial consultation.
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