27/7/2021 0 Comments
Business contracts may not be limited to a one-time engagement. At times, the engagement lasts longer and is progressive.
What this implies is that the contract may be progress-based. When such is the case, it is important that the process is properly mentioned in the contract and both parties are well aware of the clause.
For the uninitiated, adding a record-keeping process in a “progress based contract” assures that the terms of a business contract are clear and that the parties agree to the same.
Avoiding to overlook the documenting process will save you from the hassle of clearing confusion in the future.
This article is specifically designed to help you understand what a progress-based contract is and how adding the recordkeeping procedure to the process helps.
What Is A Progress Based Contract?
Consider a situation when the arrangement between the two parties is for some specific time duration, say 24 months.
Throughout the same, one of them is expected to pay for the services offered by the other.
Or say, if one of them is a buyer and the other a seller, the latter is expected to ship products every three months.
Depending upon the schedule , the buyer must pay for the products shipped, either before or at the time of delivery.
This is a “progressive business contract” and works differently in comparison to the conventional ones.
It could be a partnership agreement or a vendor agreement that provides services or goods, or a vendor contract for a market,, store, construction site, or construction project where goods or services are required over a certain period.
The duration could be determined beforehand alongside a conditional obligation to perform the task.
It is important to document or keep a record of the process so that it can be referred to as and when needed.
This helps make things clear for all, avoiding confusion or errors. For an instance - whether and when the product/service was delivered/executed/provided.
If yes, was it on time, what was the condition, is there anything pending/left from the previous milestone for later, etc.
Everything here must be recorded, that’s why you need to have agreed upon recordkeeping practices.
Tips To Set Recordkeeping In Progress Based Contracts
Knowing what a progress-based contract is and why it's important, we now see best practices to create record-keeping practices.
Specify the nature of the business and the factors on which the progress is noted. What is it that binds the two parties and what each of them must do is to keep the agreement.
Mention the dates and times for every event being recorded. This helps avoid confusion and enables both parties to keep track of the timeline of the project as well.
If you are the client party i.e. service-taker or the buyer/customer, outline the payment-related norms for the service provider or the seller party and what happens if the same is not done on time.
Mention what happens if the contract is breached or either of the parties acts differently from what is expected. Make sure to keep this clause well-elaborated.
Sketch out the timeline specifying at what intervals of time would one deliver a product or execute service and upon what conditions. This helps have a clear image of the entire business enabling them to stay compliant while avoiding confusion.
Adding a record-keeping procedure within the contract might appear to be time-consuming and energy, yet it is important and must be done by all of the business parties.
It ensures transparency of operations and/or activities binding the parties legally.
If anyone fails to do the same, he/she may be able to hold the other party liable in court.
In case you are starting a new business or signing up for a new deal, make sure you have a record-keeping procedure added in the contract when appropriate.
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Yoel Molina, Esq. (AKA “Mo”)
Yoel “Mo” Molina, I am a lifelong resident of Miami, Fl. I am a graduate of Miami Senior High, Class of 1992, Georgia Institute of Technology, B.S. 1997 and University of Maine School of Law, J.D. 2001. I have been practicing law in Miami Since 2001. I am a former training prosecutor in the Miami-Dade State Attorney’s Office. I have experience in jury trials, appeals, and administrative hearings. I have appeared before judges across the State. My experience ranges from civil litigation matters, collection matters, foreclosure, business and corporate, contracts, real estate, leases and employment matters..
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