When it comes to finalizing a deal, settling a dispute, or making an agreement official, you need to stick with a quality contract. The belief that a handshake, a verbal agreement, or an implied agreement is enough is foolish and can land you in a troubling position later down the line, which is what a contract attempts to alleviate. (Image Credit: Cytonn Photography/Unsplash)
Creating a good contract is not hard either. There is plenty of information on how to get these agreements or deals in legal terms to assure that nothing is up for interpretation, and everything is objectively stated. Here is how a quality contract protects you.
Protects From Breaches
A breach of contract is the breaking of the agreements as set legally by all the parties who are a part of the contract process. When a contract is written it is notarized and legally binding to protect the interests of all signees. The breaching of contracts happens when a contract is not a legally binding item and is simply written terms with no backing from any judicial court, and agreements are not met as set out by the written agreement. Using a contract helps prevent those handshake deal situations where someone says they will honor an agreement and breaks it. Without the confirmation of it as a legal contract, there is no way to hold someone accountable and thus a contract helps prevent breaches.
Detailed and Organized
Contracts are useful in protecting your interests because they contain a detailed orientation of what is expected. They also should be organized in how they are formatted and include the relevant filing needs like date and time. This helps identify the needs of the parties in terms that can be understood and appreciated. Bad contracts are sloppy, miss out on important details, or word them in ways that may be too hard to understand and apply to the needs of the contract. Less specific contracts can be tailored to the needs of the parties, and Hello Bonsai’s website shows the templates for contract creation. It is important that no matter the contract, it is well written and thought out before any pens hit the paper.
Contract Termination
Contracts eventually do finish. This needs to be discussed with parties involved to confirm that no one will be left empty-handed if termination occurs. Whether it is a breach of contract or if the termination is a mutual agreement, it needs to be written in to help protect you. Term limits on contracts are a good way to set out if the contract has a rolling date or if there is an expectation to come back and rewrite it if things change. It is also worth noting that a contract can protect you from breach by agreeing to contract term notifications if you are in breach of something to prepare for contract negotiation, known as dispute resolution terms.
Signing in Proper Authority
The proper way to sign a contract (aside from on the signified line) is by signing in your correct capacity/authority. This means that if you are a partner or member, like a lawyer, then you are signing on behalf of your company, not as an individual. Signing a contract improperly can put you on the hook for any breach and you would be required to legally accept your fault. This includes other signees. Other parties involved in the contract should be signed according to their responsibility or participation in the matter to avoid having to go through third-parties and making a mess of the whole contracts agreement. Authorized representation is important and needs to be confirmed before anyone signs on behalf of anyone.
Read and Reread It
Lastly, and maybe most importantly, is that you want to read and re-read the contract as many times as it takes to fully understand and appreciate it. No matter how quality it is, with all of the steps listed, you should never let anyone tell you what it says or means. Some terminology might be foreign to you which is understandable and can be alleviated with the help of legal representation, but you need to fully grasp the contract. This could mean one thorough read or it could mean 10, no matter how many times it takes (within reason, it still needs to be signed) you need to check for errors or issues.
Quality contracts are the difference between a deal or agreement going off successfully and squabble and legal battles between people who thought they were associates. These tips highlight the important aspects of a contract and what they can mean in protecting you, the other parties, and the purpose of the agreement.