Attorneys help small business owners navigate the confusing aspects of signing a contract. The biggest challenge for them is trying to untangle a problem when the contract has already been signed. The checklist below covers some of the basic components of every business contract. If any of these are missing, then don’t sign it. Your attorney can advise you on what to do if you are unsure.
List Parties by Name – The document should list everyone who will be included in the business transactions. It should clearly show the names of the interested parties and their titles and decide who will be signing the documents.
Responsibilities – The agreement should also clearly spell out who will be responsible for the goods and services that will be provided. Will they be provided by your company or an outside vendor? Is there a shipping policy? Are there any limitations or restrictions? Leave nothing open to chance.
Duration of the Contract – How long will the contract be in effect? Are there specific terms for renewal? Is renewal automatic or will you be asked to sign another contract at the end of the term? Some contracts automatically renew if no notice of cancellation is received within 90 days of the contract end date. The terms for this should be made clear ahead of time. Cancellation deadlines should be clearly spelled out and everyone should be aware of them.
Monetary Transactions – Who will be responsible for paying the vendors? When are payments due, who should pay them? Your contract should be specific about financial transactions like payments and credits. If there are penalties for late payment it should be included in your contract details.
Fees, Expenses and/or Taxes – Partnerships that are created often require fees or expenses to be paid to governing agencies. This should be included in your contract if it concerns your agreement. It should say what fees are due and who is responsible for making the payments of those taxes and fees.
Privacy – a privacy or confidentiality clause may be necessary when the other party will have access to privileged information. Data that is compromised can have devastating effects. Company secrets should not be shared for any reason.
Dispute Resolution – It is not always needed but designating someone to handle disputes can help you avoid many legal problems down the road.
Termination – There should be terms for ending the contract early should either party decide not to continue in the venture. Under what conditions can the contract be terminated? Is there a penalty for terminating before the end date? These should be included in the terms of the contract.
Notarize Signatures – Another important aspect of contracts is having the signatures notarized by an agent of the government. If you need to go to court in the future, the other party can dispute the validity of the signatures voiding the contract. Don’t leave any room for a loophole, close them up tight by having the signatures validated.
You should always have an attorney look over and review any contract before signing them to prevent problems in the future. Legal advice is only a phone call away.