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    Business - What To Include in A Business Contract

    Uploaded by

    matthew mafara

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Flag for inappropriate content
    Download as docx, pdf, or txt
    of 5

    What to include in a business

    contract
    It can be difficult to know what to include in a business contract, but it’s important to
    understand the right components so that the ones you send are valid.

    This article will detail contract basics and explain what absolutely should be included
    in a business contract for it to be useful and legally enforceable.

    The difference between written and verbal


    contracts
    It’s pretty clear by their names, but written contracts are recorded in writing and
    verbal contracts are spoken agreements that are not written down. A verbal contract,
    also known as an oral contract, can be equally legally-binding as a formally-written
    contract if the correct procedures are followed.

    So, if verbal agreements can be just as legally valid as a written one, then why does
    anybody bother going through the effort of having contracts in writing?

    Why can’t a conversation and a handshake suffice for business deals?

    Well, verbal contracts are often hard to prove legally.

    Why you should use written business


    contracts?
    The biggest reason for any written business contract is to prove an agreement exists in
    case something goes awry. For instance, there may be an argument between you and
    the other party. If the agreement was a spoken agreement, then how would anybody
    prove their side of the argument?

    In another situation, one party may simply forget what the exact terms are. It’s also
    possible that one party may genuinely misunderstand some of the original terms, or
    one of the parties may go out of business mid-contract.

    1|Page
    In any of these situations, a written contract would give everyone involved the
    security and confidence to carry out their obligations. If any disputes did arise, a well-
    written contract should allow them to be resolved quickly and professionally and help
    you maintain a strong business relationship.

    What to include in a business contract


    All the parties
    Every individual or entities that are a part of the contractual agreement need to be
    named on the contract. For instance, if a homeowner wants to hire an independent
    contractor to construct a conservatory, then both the homeowner and the business
    information of the builder need to be included.

    Some form of consideration


    In a contract, consideration is the explanation of something of value being gained by
    each party. In the building contractor example, the consideration for the homeowner
    would be the completed conservatory and the consideration for the builder would be
    the fee they receive when completing the project.

    A legal purpose
    There must be a legal reason for a business contract to be legally enforceable. For
    instance, you couldn’t have a contract hiring someone to rob a bank for you, as this
    act is illegal. Likewise, the payment cannot be illegal either, so you couldn’t pay for a
    service in stolen goods.

    Competence
    All parties involved in a business contract must be deemed competent, or mentally
    stable when the contract commenced. Being under the influence of alcohol or drugs
    can void a party from being deemed competent. Anyone who is a minor at the time of
    making the agreement is also classed as incompetent, as they may not understand the
    obligations of each party.

    Terms and conditions


    This is where the obligations and rights of everyone involved in the agreement are
    specified. These are likely to be different for every business agreement, but usually

    2|Page
    involve things like exact payments, scope of work, and timeframes for payments.
    There may also be details about how to resolve any issues when it comes to a breach
    of contract.

    Signatures
    For written contracts, it is strongly advisable that everyone signs the agreement. This
    isn’t a legal necessity, but it does help to prove that each party agreed to the specified
    terms of the contract and makes it more enforceable.

    Electronic signatures and physical signatures are both legally acceptable. The more
    traditional format is physical, although this method can be quite impractical when
    multiple people are signing. Using specialized apps like PandaDoc and DocuSign,
    everyone has the ability to add their signature with a single click.

    This eliminates the need to print, sign, scan, or email contracts for signing, and is far
    more efficient. Such apps also have additional functionality to expedite and improve
    the contract process. PandaDoc, for example, gives users the option to build legally-
    valid contracts from templates in just minutes. Users can also easily send contracts to
    multiple recipients and even track the document status from within the app.

    Always understand your business contracts


    It’s always worth taking the time to understand any contracts you come across in your
    business life, no matter the size of your business, big or small. By understanding the
    basics, you can ensure that everything you send and sign is legally valid. Just
    remember that if you’re in any doubt about a contract, you should enlist the help of a
    contract lawyer for legal advice about your state’s laws to be safe.
    Related questions
     How are contracts usually signed

     How to sign contracts online

     Are handwritten contracts legally binding?


    Disclaimer
    Parties other than PandaDoc may provide products, services, recommendations, or views on PandaDoc’s site
    (“Third Party Materials”). PandaDoc is not responsible for examining or evaluating such Third Party
    Materials, and does not provide any warranties relating to the Third Party Materials. Links to such Third Party
    Materials are for your convenience and does not constitute an endorsement of such Third Party Materials.

    3|Page
    Need to write a business contract?
    Use PandaDoc to create professional-looking contracts with customizable templates allowing for
    on-brand styles and themes.

    Start free 14-day trial


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