To succeed, your business needs to interact and transact with other companies for services and goods. Other than a one-time purchase or sale, you may need an ongoing agreement with these other businesses. A contract is an agreement between you and other providers.
One of the downfalls of any business is entering into contracts that do not hold up in court. Should you take your grievances to a judge, you want to ensure that the agreement is legally binding. Look at what you should include in a contract, so it holds up in court.
What makes a contract legally binding?
There are some aspects that a legal contract must include to become enforceable. First, ensure that the proper person is signing the agreement. You should have articles of incorporation or other business documents that show who is in your company and who can sign contracts.
The terms of the contract should include details such as:
- The date the contract becomes effective
- The date the contract automatically terminates
- The amount of the goods and services agreed upon
- The timeline or benchmarks that must occur to keep the contract in good standing
- The remedies if one party breaks the contract
The point of a contract is to provide protection when tending to the needs of your business. When another cannot uphold the terms of the agreement, you may suffer real financial loss. A valid contract can go through court, and hopefully, a judge will order the other party to compensate you for the money you lost on the deal.