For a business to be successful, the most important requirement is to get your contract right. There are various considerations involved in a commercial contract. You should know what to look for in commercial contracts, to be certain that it is consistent of your understanding, about the benefits you will receive and responsibilities to be fulfilled.
It is also important to approach and discuss with your legal advisor, before going for any review or update, to avoid any contract breach allegations. What you must particularly look for includes:
- Drafts or signed agreements, used between the concerned parties.
- Any kind of businesses dealings over a time period.
- Exchange of agreements made through e-mails.
- The conduct of the involved parties may constitute the agreement or differ its terms.
- Letters, schedules and emails of informal contact;
- The terms and conditions of the other side.
- Invitations and responses to tender and any unfinished agreements.
What Customers Should Look For
Customers should try to use the terms of contract, for obtaining commercial advantage.
If there is no specification of exclusive purchase and no requirement of buying minimum amount from a specific supplier, you can consider dual sourcing, rather than terminating, from a less expensive supplier.
Considerations for suppliers
- To be certain that the credit level of your customers is adequate with their financial standing, you should make credit limit reviews of your existing customers and new customers as well. You need to make constant reviews, because, there are chances of receiving outdated information.
- Insist on assurance from the board of directors of the company, if there are issues pertaining to credit rating of a new customer. In case of customer turning insolvent, you can obtain compensation from the guarantor. But, you should see that all applicable checks are fulfilled against the would-be guarantors, so that the guarantees are worth the statement.
- Look for your right in the contract, to terminate the agreement; if for instance, the customer fails to make the payment on time.