We enter into contracts every day for business and personal reasons. Some of these contracts are written, while others are oral. In every case, it is important that the terms of the contract are fairly negotiated, properly drafted, and reviewed to ensure the contract meets the intentions of the parties.
Negotiating a contract is very important. By negotiating contract terms, the parties to the contract bargain for their own best interests. While negotiating contracts, be aware of the following:
- Make certain you are comfortable with your duties and obligations
- Make your intentions, requirements and expectations of the other party clear at the beginning of negotiations
- Negotiate for a remedy within the contract if there is a breach by either party
These are contracts with the language and terms already set. A common example of when form contracts are used is in landlord/tenant agreements. Parties usually do not negotiate when using form contracts. Thus, be certain to carefully review the terms of the contract so you are aware of your responsibilities.
Many parties use form contracts (see above) as a model when drafting their own contracts. When drafting the contract, it is important that each party knows exactly what is expected of them. Thus, if there are any words that could be misconstrued, or any terms that are ambiguous, define them within the contract. Clarifying the terms and duties should be the goal.
Many parties use legal words and language (legalese) when drafting contracts. This may, however, make the obligations and terms of the contract confusing. Thus, use regular language to insure that both parties understand what the contract says and means.
Review of Contracts
Before signing a contract, read it. In reviewing the contract, make certain you know what your stated obligations are under the contract. If you are uncertain as to your duties, and you sign the contract, you may be liable for breaching the contract.
Have a legal professional review the contract terms to insure that your needs will be met and that you will not obligate yourself unexpectedly.
Types of Business Contracts
Once you begin engaging in business activities, there are different types of contracts you may encounter. Some typical business contracts are:
- Agreement for the Sale of Goods
- Purchase Order
- Employment Agreement
- Confidentiality Agreement
- Lease for Real Property
- Franchise Agreement