Tue, 25 Oct 2011 09:48:05 GMT | By Howzit MSN

How to Prepare a Business Contract

A contract is a great way to close a deal. Here are a few tips on how to set up a business contract.

Contract (© sxc)

A business contract is a legally binding document between two parties defining services or products of value after an offer has been made and accepted. A contract ensure that an agreement between two parties is enforced and in the case of a breach of contract that one party should be held liable for failing to hold up their end of the agreement. Without a contract you have no evidence that a deal was entered into. A contract is a great way to close a deal. Here are a few tips on how to set up a business contract.

Basic terms of agreement
All the basic terms of your agreement will need to be summarised in writing on a document. A contract is only valid once both parties have agreed and signed on all the terms which appear in the contract.

Research other business contracts
Search for templates and examples of other business contracts. You can tweak and modify a template to suit your terms of agreement and your businesses needs.

Use clear language
Make sure that your terms in the agreement are spelt out in clear concise language. There can't be any confussion about stipulations or terms of agreement in the contract.

Include all details
You should include all minor details and specified terms in the business contract. Go through the contract thoroughly on numerous occassions to ensure that you have included who, what, when, where, why and how with regards to the business deal.

Anticipate complications
You should always anticipate complications that might arise with the deal. Make sure that you have covered yourself for non-performance, lateness and default. You need to inform the other party of any modifications or new terms which will be relevant to agreeing terms.

Get a professional's advice
It is important to get the advice of a professional attorney or lawyer especially if it is a large business deal. When dealing with big investments you need to ensure that you are working within the parameters of the law.

Keep records
Create two original contracts and send them both to the other party to sign. Both parties should make sure that they initial each page of the contract agreeing to the terms. Once you have sent the contract you should make sure you get it back as soon as possible. When both parties have signed the agreement each party should keep an original for their records.

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