Contracts are the most basic and important form of protection for those operating a business. Most business owners and managers expect everyone that they do business with to sign contracts.
A contract with your supplier can lock in prices and ensure you have the supplies you need at specific times. A contract with your employees can create an enforceable standard of behavior and realistic expectations about severance. A contract with your customers or clients will make it clear what they have to pay you and what obligations you have to them.
Just executing a contract isn’t enough. You need to avoid major mistakes, like including terms that violate the law or being too vague for the courts to enforce the agreement. The document has to include the right terms and language to protect your company. A little bit of planning while drafting a contract can reduce the risk of conflicts for your business in the future.
Include all the details necessary to meet obligations or have them met
The customization of your contract through the inclusion of specific details is one of the most important ways to avoid future disagreements and conflicts. Exactly what information is necessary will vary.
A construction contract should include information about project timelines and materials, as well as how to handle delays or changes to the client’s wishes. An employment contract should include compensation and benefits information, as well as information about company practices. Supplier contracts might include provisions that allow either party to renegotiate pricing or timing.
Making sure to include the details that matter to you in the contract will lead to mutual agreement on those crucial points.
Plan ahead for conflict resolution
You don’t have to wait for a conflict to crop up with a person or business to plan for how to address it. Including conflict resolution rules, such as an agreement to attempt mediation before going to court, can be helpful when drafting a contract.
That way, even in the midst of an argument, all parties to the contract have an obligation to try to communicate clearly, which could possibly preserve the working relationship. It may also be wise to include specific penalties for breach of contract so that both of you understand the consequence of a failure to meet the expectations of the other.
When everyone really understands the terms of the agreements that they set in a business contract, it can be easier to avoid conflict and resolve issues as they arise during business relationships.
