Understanding The Enormous Importance Of A Business Contract

As you likely already know, businesses in the United States get sued on a regular basis. In fact, even some of the most trustworthy business owners can find themselves on the wrong side of a lawsuit. It is pertinent to take steps to protect your business from a lawsuit, before a disgruntled client takes the first step of filing the lawsuit against your company. Believe it or not, one of the best ways to protect your company is utilizing a strategically written contract. Below, you will learn how a contract can limit your risk of getting sued by an unsatisfied client.

Sets The Expectations

First and foremost, you should realize that the entire purpose of the contract is to set expectations. The written contract should state the expectations of both parties, while also laying out steps that should be taken to mediate disputes. As the business, which is delivering a service, you should never be unrealistic. Try to be as reasonable as possible when describing your business and its services to the client. Do not pretend that you can offer them more than you actually can. Keep their expectations reasonable and you’ll be able to meet them each and every time.

Setting Costs

Whether you’re selling resources or providing the client with a service, you’re going to want to ensure that the client will pay in full. This is where your contract will come in very handy. The contract will give you the ability to enter into a payment agreement with the client. The contract can be used to specify the deals of the payment plan or the fixed cost that should be paid upfront. This segment of the contract will be beneficial for you and the client. It prevents the business from increasing the costs of the economic resources in the future, while also ensuring you get paid in full.

If the client fails to pay, you will be able to use the contract as evidence in the court of law.

Limiting Obligations

In many cases, the client will wind up angry, because they didn’t receive the service they were expecting. There is a possibility that the client wanted maintenance and technical support, but your company only offers one or the other. This is why it is pertinent to use your contract to limit your obligations. In the content of the contract, it is pertinent to clearly define your obligations. The contract should specify the work that you’re going to carry out, how much you’ll be paid, and when the work will be completed.

Working with a business attorney is highly recommended. With their assistance, you will be able to ensure that the contract works in your favor.

Non-Compete Agreement

Using your contract to help curb competition is also a good idea. When dealing with a new client or a new employee, it is generally a good idea to add a non-compete agreement to the contract. This specific portion of the contract can prevent employees and businesses from offering competitive services and products in the open marketplace. Generally, the agreement will cover a specific period of time or even a geographical area. This is a good way to prevent a terminated employee from opening a competing business in your city immediately after their termination.

Shows Professionalism

When working with any client, you should expect that the individual in question has already consulted with several other companies. Therefore, you’ll need to go above and beyond to win the individual over. Using your contract is a good way to help seal the deal. When consulting with the potential client, you should take the time to analyze the terms of the agreement with the individual. This will help make your company look far more professional than your rivals. With a little luck and the right contract, you’ll have a much better chance of sealing the deal and getting the client’s business.

Published by Kidal Delonix (1200 Posts)

Kidal Delonix is a contributor to Mr. Hoffman's blog. The views and opinions are entirely his/her own and may not reflect Mr Hoffman's views.