Perhaps you are about to launch your new company. You may have a partner, a couple of key suppliers and, in time, employees.
Contract agreements will put your business relationships on a sound footing. Here are five tips for creating a good contract.
1. Set the terms
You may wonder how in the world to start drafting a contract. Begin by making a term sheet. What kind of terms should there be? Your partner or anyone else involved can contribute their thoughts. At this stage, you should all be looking at the big picture. Details will come later.
2. Decide what you want
What are your objectives? The first contract you draft will provide the framework for future drafts. The end result will likely be a good deal different than what you anticipated when you began. Through it all, always keep in mind what you want out of the finished contract.
3. Negotiate reasonably
Negotiation is an important part of putting together any contract. Maintain a positive attitude. Be reasonable, not combative. Be sure you do any research that will be helpful in the negotiations.
4. Resist rushing
Take your time. If there are parts you do not understand, ask questions and get clarification. If anyone tries to rush you, it may be a sign that something is amiss. Again, think about what you want to achieve with this contract—and what others are trying to achieve. Are their goals the same as yours?
5. Seek professional help
The contract should be written in such a way that it protects your interests and creates a workable path forward. It serves as the foundation for your business. Legal assistance is important both in terms of overall review and in structuring certain sections properly so that the contract in its entirety will be able to withstand scrutiny if there should ever be a need to go to court.