Drafting business contracts might not be the most exciting task you will have to do as a business owner, but it is absolutely necessary for all small businesses. Here are eight essential tips for small business owners about how to write a business contract that will protect your interests.
#1 Focus on the Most Important Clauses
The first thing you should do is figure out the most important clauses for your business. Then, you will need to focus on these clauses throughout your document. To put it simply, clauses are the sections you will want to include in your business contract. They will always depend on the project you are working on, so there is no definitive answer to what clauses you need.
Nevertheless, every small business owner should think about which terms, requirements, and conditions you would want to discuss in your document and negotiate with whoever you are signing the agreement with. You should also consider which points you are willing to compromise on and which ones not that much.
#2 Use Understandable Language
Though many businesses want to use strictly formal terminology, it is not always a good idea to use too many terms that will make your document sound too complicated. This is why you need to strive to use language that you understand. Reserve some of the legal jargon (also known as legalese) for the final documents but use something simpler on the stage of negotiations.
Remember that you are not a professional attorney, so using a limited amount of legal jargon will prevent your document from sounding like gibberish to you. Opt to use language that you will understand no matter what so that you can avoid misunderstandings and don’t get confused too much.
#3 Think Through All the Possible Outcomes
A common mistake made by small business owners when writing legal documents is that they forget to discuss all the possible outcomes. Just like using too much legal jargon, forgetting to discuss all the possible outcomes can result in misunderstandings between you and whoever you are signing the agreement with.
One of the main aims of any and every contract is to predict all the possible outcomes and address them immediately in the contract when you are writing it – not after you have come to an agreement and suddenly remembered about the possibility of this or that happening at some point. This is exactly why many business owners prefer hiring a professional attorney.
#4 Use a Professional Writer
That being said, it is not always necessary to hire a professional attorney for your contract. Instead, you can consider hiring a professional freelance writer who has sufficient experience writing such documents and has all the necessary skills that you would want a contract writer to have. This might even make the contract writing process more affordable.
Affordability, of course, is crucial for small businesses, so it is a really good idea to consider professional writers instead of attorneys. For example, you could choose a writer with the help of a writing service like Writing Judge to find the best specialist for your document. You can compare writers and check their reputation, experience, skills, and so on.
#5 Talk About Payment Options
In some way, the payment options are a part of the clauses you would want to discuss in your document concerning your agreement. However, your payment options and details need a completely separate section because of their importance. Here are some things to keep in mind when writing your payment options:
- Do preliminary calculations to make sure everything is right.
- Be reasonable and don’t overestimate or underestimate your costs.
- Always remember the possible additional expenses you might have.
- Clearly state everything you want to discuss your payment options and details.
- Try to talk about everything you want to discuss and don’t leave out any important details.
#6 Remember About Both Parties
When writing your contract, remember that you are doing it both for your business and for the other party, so write down the obligations and duties of both parties. Think about all the small and big details you would want to discuss including terms, responsibilities, obligations, and so on (both financial and non-financial).
Just like with your payment options and details, remember to be as clear as possible and don’t forget any small responsibilities that each of you will have. Your aim is to avoid ambiguity and be concrete in what each of you will be doing, when you will be doing it, how you will be doing it, and how much it will cost.
#7 Determine the Controlling Law
Determining the controlling state law or rather the clause about the controlling state law of your document is crucial for your agreement. This will, in turn, give you the opportunity to have all the legal proceedings to take place in your home country or region.
Firstly, it will be less expensive for you because you will not have to travel. Secondly, you will feel more confident because you will be in your home territory. In other words, determining the controlling law now will make all of your future procedures much easier because you will have somewhat of a foundation for your actions laid out from the start.
#8 Include Clauses About Confidentiality and Intellectual Property
Last but not least, don’t forget to include a clause about confidentiality and another clause about intellectual property. These two are essential for several reasons, but let’s get to them one by one.
When it comes to confidentiality, there might be some information that you don’t want others to know about. This is usually either something personal about the employees in your company or the personal information of your clients.
And when it comes to intellectual property, there will always be something your business has patented or wants to patent at some point. It is best that you note down your intellectual property in the document rather than figuring out such things already when you have signed the agreement.
Final Thoughts
All in all, writing a legal contract will take a while the first several times you do it, but once you write a contract a few times, you will get more practice and eventually get used to it. Just follow the tips in this article about how to write a business agreement and you will start making progress.
Guest Post: About the Author
Thomas Lore is a 23-year old writer, who is currently working for Pick The Writer. Also, Thomas is a creative and diligent freelance blogger, who is always seeking for new ways to improve himself.