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3 essentials every contract should have

On Behalf of | May 2, 2024 | Business law

As a business owner, a lot will ride on your contracts. They help define relationships with everyone from your employees to your suppliers and clients to the person who comes to clean your space.

A poorly made contract invites problems and can leave you vulnerable if they occur. So what should a good contract contain? Here are three things to start you off:

The scope of the contract

You must be clear about how long the contract will last and when (and by how much) it can be amended. Think about something like a commercial lease contract. The tenant needs to be sure the landlord will not eject in six months or continually seek to increase the rent every few months. The landlord needs to know that they can increase the rent at some point and can take back their building if they wish to sell it in the future.

Proof of acceptance

A contract must contain an offer by one party and the acceptance of it by the other. The signatures of both parties is the best way to prove you have this.

How you will resolve disputes

Disputes can still occur even when you do your best to avoid them. Setting out how you will deal with disputes you cannot solve gives clear guidance if that should happen.

One example could be making clear that arbitration, rather than litigation, is to be used. Another, such as in the case of a partnership contract, could determine that one party will always have the final say if an agreement cannot be reached.

There is a lot that goes into an effective contract, and it is easy to get them wrong. Taking legal guidance for all your contracts is best.