Steve Madoni
Benjamin Franklin once said, “Lost time is never found again.” Benjamin Franklin would have known a written contract saves a wise businessperson from losing valuable time away from business. In business, a contract is an agreement by two or more parties the parties intend can be legally enforced. Contracts can be oral, but some are required by law to be in writing. Some of the contracts required by law to be in writing include:
- Real estate sales
- Agreements to pay someone else’s debts
- Contracts that take longer than one year to complete
- Real estate leases for longer than one year
- Contracts for over a certain amount of money
- Contracts that will last longer than the life of the party performing the contract
While some contracts may be oral, wise business practice is to put all business agreements in writing and to have the written agreement reviewed by an experienced attorney. A wise business contract explains each parties’ obligations and rights under the agreement. A smart business contract also provides for simplified dispute resolution if appropriate.
Some important terms that should be included in a business agreement are the date the contract begins and when it expires, the names of all parties involved in the transaction, key terms and definitions, and how the parties will resolve missed deadlines, incomplete work, breach of contract, and damages.
Business contracts are not required to be written in formal legalese. Overly formal agreements can cause more confusion than benefit because they are hard to understand. A wise businessperson should use a written contract written in simple and clear language. The business contract should be written with as much detail as possible to avoid confusion later.
Consulting an experienced business before a contract is finalized may save the wise businessperson from losing substantial time and money later if a party to a contract fails to perform as promised.
