An investment contract is a contract between an investor and the firm or institution investing in. Since the investment contract is entered by both the parties so that each gets benefited from the other, the investment contract protects the interests of all the stakeholders involved. An investment contract mentions the amount of investment done, name of the individual, name of the bank, company, or institutions, the payment modes along with the returns date and method. The following points are to be kept in mind while designing an investment contract.
Points to be kept in mind while preparing an investment contract:
- The investment contract should begin with the name of institution in which the investor is interested in investing. If there is any account that is connected to the investment making, then it is also to be mentioned with the bank details.
- The period of investment is an important part of the investment contract. The periodic payments (if any), the deductions applicable, the processing charges, etc are to be clearly made a part of the investment contract.
- The way in which the company will use the funds of the investor can also be mentioned. The interest of the investor is to be borne in mind by the institution.
- All the clauses that come under the investment contract along with the federal laws and regulations that can affect the agreement are also to be mentioned.
- The investing institution should not try to be vague in its investment methodology. Clear cut terms and responsibilities develop trust between the two parties.
- The legal documents that shall be needed for the approval of the investment are to be submitted by both the parties as under obligation.
- The terms when the investment contract would lead to termination are to be mentioned so as to not let any party take advantage of the loopholes in the investment contract.