How to Draft a Business Contract Agreement for Companies
The best negotiated terms of business can come to naught without a solid contract agreement that clearly spells out the details. A business contract agreement is a document that ensures all parties involved in the transaction operate along the same lines. Following the acceptance of an offer of business, draw up an agreement detailing the specific terms under which you're going to do business. This is crucial to avoiding disputes that may arise due to incorrect interpretation of terms.
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Instructions
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Review negotiation terms. If you have rough notes of the terms of agreement, review those for clarity. Make sure you understand all the terms. Check to see if there's anything ambiguous or any details that haven't been covered and get everything clarified with the other party before you proceed to draft the contract agreement.
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Collect relevant information. Ensure you're abreast of the local laws relevant to your area of business. Visit your local chamber of commerce or browse the website of your state's business regulatory body to update your legal knowledge. Consult a lawyer, if required, to clarify the exact meaning of particular statutes or laws. Procure information like the legal names, addresses and tax ID numbers of all the parties concerned.
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Describe the transaction. Begin with stating the date from which the agreement will take effect. Specify the legal names of the parties between whom the contract is being made. Write out in simple language the exact terms of the agreement -- who is going to do what. Review this portion from the perspective of a third party to identify if it's clear enough to be understood by someone who's not involved in the agreement.
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Provide specific details. Write down the rights and duties of each party; specify what constitutes a material breach of contract. Lay out the terms of payment and dates when these are due; provide details of any interest that may be levied on late payments. If your business with the other party is subject to time lines, provide a deadline for completion of the project.
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State warranty periods and disclaimers. When the contract involves sale or lease of products, declare the warranties that are offered, other than the basic warranties that are implied by the law. In the event that you wish to disclaim some implied warranty, check your state laws and follow the prescribed instructions to make these disclaimers conspicuous.
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Specify damages and remedies. Provide accurate details of the amounts to be paid by the concerned parties in the event of a breach of contract.
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Note expiry and termination details. Clearly state the time for which the contract is valid. If it's applicable to the nature of business, add a clause regarding renewal of the contract. Describe conditions under which the contract stands terminated.
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Tips & Warnings
Drafting a business contract agreement is more about conciseness and clarity than about style. Make sure the language used is understandable and to the point.
You can simplify the process of drafting by using the free contract templates available online; make sure that the clauses are in keeping with your state laws and the specific requirements of your agreement.
References
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