Business Perspective : Be wise, sign contracts in all business undertakings

It is very dangerous in business to work without a binding contract. This contract also should outline the pros and cons of everything regarding the business to be undertaken. A few weeks ago I made a mistake by listening to my heart rather than thinking with my head making me lose money wise. In fact in my heart am least worried about the business itself but my thirteen dependants whom I am not so sure of what will happen to them in the next many months. I tied the little money I had in this business opportunity which had presented itself only for it to turn sour just because of one thing called contract, since most of the time communication was verbal. My mistake was that I did not have a good contract which would have protected my business in time of need. In my bid to reclaim what is rightfully mine, I also came to know that most small businesses do not even have contracts; in fact one business neighbour was even asking me what a contract is all about. Well for starters, a business contract is a legally binding agreement between two parties for an exchange of services that are of value. For a contract to be valid, an offer must be made and accepted. Using a contract in business dealings helps ensure an agreement is acted on, in so far as a broken contract could result in a lawsuit or out-of-court settlement and the payment of damages caused by the breach. The best way to avoid a dispute or potential litigation, however, is to craft a solid agreement in which you are confident you’ve negotiated the best terms for your business. So when does a business contract come into use? A business contract is often used for:Hiring or being employed as an independent contractor Buying or providing services or goods Leases and real estateSelling your businessPartnerships and joint venturesFranchisingConfidentiality agreementsNon-competing agreements There are two types of contracts; Oral Business Contracts An oral contract is a spoken agreement that is as valid as a written contract. For example, if you have a promise that a job will be complete without any written document signed by both parties for monetary or other compensation, you have created an oral contract. Oral contracts are legally enforceable, although they are frequently subject to misinterpretation and they can be difficult to prove in court because they often come down to one person’s word against the other. This is the mistake I committed of having oral agreements; I therefore discourage any business man against this kind of a contract. Written Business Contracts Written contracts are produced on paper or electronically. Legally, a written business contract is easier to uphold than an oral contract because there is a reference for the agreement. With a written contract, it’s “easier to prove … the terms between the parties and eliminate arguments over who said what. It is often easier for businesses to recognize potential points of contention in the language because the agreement is detailed in writing.A business contract should be labelled “contract” or “agreement” at the top. These are some items it can include: Date of contract Names of parties involvedDetails of services that your company will provide or receivePayment amountsPayment due dates. Interest on late paymentsDeadlines for services due. This is also called a “time is of the essence” clause. You will probably want to use this phrase in your contract if you have a timeline for a project.Expiration dates for the contract, such as a lease expiry Renewal terms, if applicable Damages for breach of contract. Also called “liquidated damages,” this clause can specify amounts to be paid if services are incomplete or deadlines are missed. A court can also award damages if a contract is breached, even if damages and amounts were not included in the agreement. Termination conditions Signatures Contrary to what people think, not all contracts require legal jargon. The best contracts are clear, specific and focused, with wording that is simple and concise to avoid any confusion. When the deal is too good think twice; get a good contract which will protect you -instead of finding yourself dancing to the tune of being heavily indebted like some of us due to poor business decisions. Ends