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3 steps to building a quality business contract

On Behalf of | Jul 27, 2021 | Business Formation |

Contracts often require you to negotiate and come up with unique terms based on your relationship with the other party. You may want to set up a non-compete clause or add an arbitration clause. You might be interested in negotiating your pay or what you’ll pay the other party, too. You’ll also want to include deadlines and timelines for all aspects of your business relationship.

For all of this, it’s important that you have a well-designed contract. How can you make sure that your contract is foolproof? Here are three steps to take to get it right.

  1. Start by understanding your positions

The first step is to understand your position as well as the other party’s position. You should discuss what both of you expect or want to get out of your relationship well before you ever talk about the terms of a contract. Once you have a feel for how your relationship would be, you can start getting down to the more specific details.

  1. Be clear about your goals and position

You should be clear with the other party about what you expect and want to see happen when you work together. You will need to draw up a proposal, and that proposal may then be negotiated against. In your proposal, you will need to be sure that your terms are exactly as you’d like them. You can’t make the terms less favorable later, so this is where legal support is essential.

  1. Make sure you have the payment terms and exit clauses laid out

Finally, be sure you have the payment terms and exit clauses that you need in the contract included as soon as possible. Use plain language and make it clear when payments are due, what to do if there is a contract dispute and how to exit the relationship if either party wants to do so.

These are three steps to help you build a quality contract. Remember, you should always know your legal rights and options before you sign any kind of contract. It’s worth knowing that the contract will protect you if you need it to do so in the future.

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