Important Elements of a Business Contract
Whether you are drafting or signing a contract for your business, it is important to look it over carefully so you know what exactly you are asking someone to agree to, or what exactly you are agreeing to in the case of signing. Reading the fine lines of a contract might not be the most exciting step in running a business to you, but it is important. The following are elements that you should be on the lookout for whether you are drafting or signing a business contract.
Negotiation: First and foremost, it is important to mention that negotiation is a key part in most contract formation. Each side needs to have the ability to express the terms and conditions they want present in the contract. From there, negotiation can take place to ultimately decide what those terms and conditions are.
Basic Elements: In California, there are basic elements that must be present in order for a contract to be enforceable. These are, at the bare minimum, what must be present in a contract.
Parties: Everyone that is going to be held to the terms of the contract need to be listed and identified appropriately.
Rights and Responsibilities: The point of most contracts is to outline the responsibilities of each party involved. Make sure the terms of the contract are spelled out clearly. Do not rely on a purely oral understanding of the contract. This is where it is important to read the entire contract because the responsibilities and rights of each party are often spread throughout the contract in various parts, not contained to just one paragraph.
Remedies: Every contract should include a provision for what should happen if things go awry. While you do not want there to be a breach of contract, knowing that there is a plan should something happen is imperative.
Confidentiality: Is this contract confidential? Or, are the terms and conditions going to be available to everyone? Make sure to include the requisite language of confidentiality, depending on your specific needs.
Disputes: Should there be a dispute during the term of the contract, it is important to spell out how that dispute should be handled. Arbitration, court, and mediation are common types of dispute resolution named in contracts.
Termination: Does either party have the right to terminate the contract? What are the conditions in which termination is appropriate? Be sure to include provisions about terminating the contract and the process to do so.
Incorporated Documents: If there are other documents relevant to this contract, make sure they are clearly referenced in the contract.
Signatures: In order for a contract to be enforceable, it must be signed by all parties involved. Be sure to check for the proper signatories who have the authorization to sign the contract.
The business attorneys at the Law Offices of Kris Mukherji are here for all of your contract needs. Whether you are drafting or signing a contract, we can help you understand and interpret the contract, as well as help you decide what terms and conditions you need to be present in the contract. Contact us today for a consultation.