A small business could face certain legal and financial risks when working with clients, employees and other third parties. This is why it is crucial to minimize these risks and reduce potential complications through strong business contracts. A carefully drafted contract can lower the chance of a costly and complicated dispute that will cost a Louisiana business both time and money.
It is easy to overlook the necessity of a contract in certain situations. For example, you may not believe a contract is necessary if you are hiring a family member, and you’ve previously discussed pay, schedule and other details. You may not think it’s worth the trouble to draft a contract for a relatively straightforward transaction. However, it is worthwhile to protect your interests, and this may mean having contracts in place for even straightforward or simple things.
What’s in your contract?
Every business is different, and you can custom-tailor your contracts to suit your individual needs and objectives in the individual situation. The following tips can be useful if you are drafting a business contract:
- Use language that both parties can easily understand.
- Make sure any agreement is in writing.
- Be as detailed as possible in order to reduce the chance of confusion.
- Include confidentiality or non-compete clauses if necessary.
- Include terms that explain what happens if one party breaches the contract.
- Make sure you include details regarding payment and more.
You can also include clauses that will give you additional protection in certain situations. For example, your contract may include a requirement that both parties attend mediation before breaching the contract. It is also important to consider state laws when creating a contract. Any mistake or inadvertent error in the terms of the contract could render some or all of it invalid.
Now and later
One thing to keep in mind when creating business contracts is that they need to make sense both now and in the future. A strong business contract should not only meet your needs now, but it should also protect your interests for as long as you expect the business relationship to last.
Balancing your business interests with what is legally prudent and possible in a contract can be complicated. You will benefit from understanding contract law and having a willingness to do the work to ensure you company’s interests are secure.