A business contract specifically refers to a contract which involves a business transaction — it is a legally binding agreement between two or more parties for an exchange of services which have value. A business contract is used by companies to make sure that the deal is acted on and terms are mentioned clearly so that there is no breach of contract.
A business contract must include the following items:
- Date of contract: Every contract has a commencement date and an ending date which is the term of the contact.
- Names: A business contract must clearly mention the names of the companies along with their representatives.
- Terms and conditions: These must include rules both parties agree to, details of what products or services one company is offering the other and what remuneration it will get in return.
- Payment details: Besides giving the payment amount, it must also mention how and when the payment will be made by one party.
- Termination clause: There are conditions under which a business contract is nullifies and these conditions must be clearly mentioned in the contract, along with damages for breach of contract.
- Signature: The business contract must end with the signature of both parties.
There are certain tips one can follow to make a clear and concise business contract.
- Be to the point: There is no need to use roundabout legal jargon as long as the terms are clear to the two parties; address the deal in a concise, specific and clear manner.
- Legal knowledge: It is better if one is familiar with the legal issues involved with the deal and knows about the laws related to the business contract.
- Read carefully: There are many points in a contract, especially in the fine print, that one tends to miss and hence should read the entire contract.