People enter into business agreements every day. While you may engage in these agreements for many different reasons, there are some essential components they all should include. Having these basic characteristics present will not only ensure an understanding between both parties but will also ensure the legality of your agreement.
1. Put It In Writing
Verbal agreements between parties can be binding contracts when certain elements are present. Although a man's or woman's word may be their bond, people frequently go back on the word and do not uphold their end of the agreement. This often leads to speculation or denial about what one said or agreed to.
When you put your legal business agreements in writing, they are much more enforceable. The contract outlines the terms and conditions of the agreement for all parties to see. These written terms make the document easier to understand and evaluate. Your document will clearly spell out each party's rights and responsibilities.
2. Keep It Simple
Legal business agreements can be free of legal language. They need to spell out the rights and obligations of all involved parties in language that all parties will understand.
Make sure you include everything that you and the other party agree upon. You will have difficulty enforcing it if you do not include it in your agreement. If you forget something or want to change something in the future, you can create a written addendum or amendment to your agreement in the future. Just remember that your addendum needs also to be signed by all involved parties.
3. Identify All Involved Parties
When creating your legal business agreement, it is essential to identify the roles and responsibilities of all involved parties. It is also important to remember who will perform each function and their full legal name. This identification is beneficial in case something goes wrong in the future.
4. Outline Who Will Pay What And When
Most legal business contracts outline some type of exchange. This exchange is often a good or service for a monetary payment. Your contract should outline the exact details of your exchange. For example, your contract should include:
- What the party will pay
- Who will pay
- Who will receive it
- When will it be paid
- What the goods will be
- When the party will deliver the goods
If there will be payment installments, the dates of the installments also need to be included. Also, include the form of payment accepted. While some businesses may prefer a credit card payment, others may charge a convenience fee. For more information on legal business agreements, contact a professional near you.