The Executive Suite: How to Create Business Contracts

Tuesday, September 24, 2013

How to Create Business Contracts

Creating a business contract need not be a difficult task for a business owner provided the owner has clearly defined the need for making an enforceable business agreement with another party. Businesses create contracts with other vendors and customers for the purpose of ensuring that any agreements entered into for business purposes has been clearly defined in a document describing each party's rights and obligations to avoid any confusion or disagreement. Any business owner can draft a business contract by following a simple set of guidelines.

Suggestions

Define each party to the contract. You need to include the correct legal names of the parties. If you are dealing with two corporations, identify each business by its legally defined name as it appears in the corporate charter.
Establish the contract's consideration. You must determine what each party in the contract is expected to gain from the agreement. For instance, you might enter into a contract with a customer to ship 100 of your instructional DVDs in exchange for $500.
Describe the rights and obligations of each party under the contract. This will require you to clearly define what each party promises to do under the contract.
Establish the manner in which payment will be made under the contract. Include the amount of the payment or installment payments, the date by which such payment or payments must be made, and the acceptable form of payment, whether it be in cash, cashier check or on credit.
Describe the circumstances by which one or the other party can terminate the contract. For instance, if one party fails to fulfill their contractual obligation the other party should be able to terminate the contract without breaching the contract.
Establish a means by which the parties can settle any disputes that may arise. For instance, you might require that certain disputes be settled by mediation or arbitration.
Establish which state's law apply for the purpose of enforcing the contract. For instance, if you reside in New York and the other party to the contract resides in New Jersey, you might both agree to require that New York law will cover the terms of the contract.