10 Tips for Making Solid Business Agreements

Agreements or contracts are important for making a business deal. They outline what the contract is agreeing to, any exclusions to the contract, and other important details. However, business deals can go south quickly if not done correctly. Attorney Jeff Wagener sits and talks about tips to make your business agreements as strong as possible.

1. Make sure to get the contract in writing

2. Keep it Simple

You do not need long contracts with complicated words. A concise, clear, easy to understand contract is all that is needed. Simply state what the party’s obligations are under the agreement.

3. Deal with the Right Person

Be sure you are negotiating with some who has the authority and the ability to buy the entity they represent. Do not negotiate with someone who has to get someone else’s approval to confirm an agreement. This causes more confusion and misunderstanding when drafting the business deal in writing.

4. Identify each party correctly

Sometimes you may be dealing with an individual, corporation, or LLC. Identifying the party correctly is crucial to making the agreement clear to each member involved.

5. Spell out all of the details

Do not assume that you can leave things open for future discussion. Make sure you have everything in the contract that needs to be in there. Think of every contingency that you can think of, and make sure that it is a complete and thorough contract to avoid any future confusion. Judges often look to the contract and what the intentions are of the parties involved, not what lies outside of the contract.

6. Specify payment obligations

Payments are often time the most problematic area of a contract. Topics such as how much is to be paid, when the amount is to be paid, and to whom it is going to be paid to. Make sure the terms of payment are clear and specify who the money is to be paid to in the contract, timeline for the payments, and if/what the penalties are if a payment is late.

7. Agree on when & how a contract can be terminated

Can any party terminate the contract at any time given a certain number of days notice? Can it only be terminated on a breach by one of the parties? This is an important term that needs to be included in the contract.

8. Agree on ways to solve disputes

Will you have arbitration or mediation to solve the disputes or do you prefer to go through the judicial process? There are pros and cons to both, but the chosen method should be spelled out in the contract.

9. Pick a state law to govern the contract

This is important when two or more parties to a contract are from different states. Determining which U.S. state you wish to go through in the event that there is a dispute. If you chose arbitration or mediation, determine which state that is to take place, including the city or location of where the discussion will be held.

10. Keep it Confidential

In a business relationship or contract, you will often have access to that other business or individual’s confidential information or files on hand. They will also have access to yours. Be sure there is mutual promise that any confidential information that is shared with the other party is kept confidential.

You should always have your contract reviewed by an attorney. It is important to make sure the terms of the contract are lawful and can be enforced. This will help prevent misunderstandings within the contract before you sign. If an attorney can spot something that needs to be discussed, corrected, or modified by both parties, it is always a good thing to do so in the future, litigation will be less likely.

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