If you are an entrepreneur or business owner, you probably have a lot of experience with contracts. You may have even made some mistakes and learned from them.
In fact, you might avoid making a few more errors if you read on to understand a few common mistakes that businesses make with contracts.
Starting work without a written contract
Handshake agreements and saying, “I’ll get started right away,” without discussing payment terms, deliverables and the like set up many businesses for disaster. It is best to get a written contract before you begin work so that expectations are clear. You are also more likely to receive payment for your work, and disputes should be less likely to occur.
Assuming the meaning of a word
Jargon is a mainstay in many contracts; even quite a few real estate contracts contain big words specific to the field. Moreover, the words do not always mean what you think they might. If you are unsure about the definition of a term, have the meaning spelled out in the contract. Specificity beats vagueness and helps prevent conflicts.
Skipping deadlines and payment terms
Your business needs to get paid, so you may have a problem if a contract does not spell out a deadline or payment terms. Other related considerations may include:
- Reimbursements for accrued expenses
- Grace periods
- Cancellation fees
- Kill fees
If you are doing payment installations, outline the due date of each installation.
Agreeing immediately to the terms
It is okay to negotiate a contract, especially if you feel you can do better or receive fairer treatment. At the very least, you should take a day (or several) to thoroughly review the contract to ensure that it satisfies your needs.
An attorney can help analyze your contract to minimize the possibility of future disputes. If you are writing the contract, you can also get assistance from an attorney to make sure the document is legally sound.