7 Tips To Follow Before Signing An Agreement To Protect Your Business

Business contracts may or may not be a common thing for you. However, business disputes are pretty much popular and experienced by most business owners. 

While dealing with them is always an option, an ideal solution here is to avoid them when possible.

This is where business contracts are relevant. 

As a legal document, business contracts outline the manner in which operations are conducted, what are the duties and responsibilities of all in the agreement, etc.

In case you are not sure how to create a business contract or what you should look for in the contract before signing it, this article will help you with the same. 

Here are seven tips you must follow before signing an agreement.

7 Tips To Follow Before Entering Into A Contract

1. Enter Into Written Agreements

It is known that contracts are also done orally which means that the two parties shake their hands and promise to act in a decided manner. While this might sound easy, it is a good practice to have a written document with all of the terms and conditions stated.

2. Research The Parties To The New Contract
 
You must have significant information about the company or person with which you are entering into an agreement. Having clarity is important and hence the need for due diligence. You can also check the creditworthiness of the party.

3. Consult A Lawyer

Business contracts have legal terms that might not be understood by non-lawyers. It is best advised to consult a lawyer and have him go through the contract so that you can understand each clause in the contract.

4. Payment Terms

Before signing the contract, go through the section that mentions the payment terms of the business. Whether it is a one-time payment or a recurring one, make sure the terms written are valid and agreed upon by both parties. In addition to the above, keep tabs on the clause that mentions the consequences or when you fail to pay the desired amount.

5. Termination

Check the termination clause added in the contract. Even though the two parties pledge to perform their duties for a certain time period, disputes occur and so the need for a termination clause. Specifically, the clause suggests what would happen if the contract is terminated before the scheduled date. Also, what happens when the contract is breached and who is liable for the repayment?

6. Concerning The Law

States have their own governing law, and irrespective of what clause has been added in the business contract, if the same is not acceptable by the law, it is not upheld in court. 

Hence, you must go through the contract and further through the state law to be sure of what the contract exactly means and its validity.

7. A Thorough Read

Lastly, go through the document thoroughly. 

Read through each and every clause, one line after the other so that you don't misinterpret it. In case of confusion, reach out to the concerned party to know more about it and then if convinced, sign the contract.

Common Terms In A Business Contract

Settlement: coming to terms that all the parties agree and stand by.
Litigation: Handling disputes in the court.
Termination: Willfully ending an agreement.

Follow the steps given above to sign contracts in an effective manner. I hope it’ll help you in your future endeavors, and in saving the business from troubles too.

Also, you never have to be without the support and counsel of fellow business owners if you join our entrepreneur and business Facebook group. 

Daily we share information and content for business owners. 

Click here now to join, tell us who you are, and always have the information that you need to support your company’s success. 

Do not delay...as your success may depend on it.


Yoel Molina, Esq. (AKA “Mo”)

​​Feel free to join our WhatsApp group if you want to know more aboutt his and more!