A business contract is the solidifying step of every business agreement. In most cases, business contracts mean more money for the company. Despite the great benefit of business contracts, when the process is not properly taken care of, this can take more time than is required. It is against this background that this article focuses on the fundamentals of business contracts. Understanding the fundamentals of every business contract helps to simplify the process involved. Below are 5 fundamentals of a business contract
Identify the purpose of the contract
What is the major reason for the contract? What do you intend to achieve with the contract? What need do you intend to meet with the contract? When you identify the purpose of the business contract, it is easier to plan out how to achieve this by specifying the role to the actualizing of the goal. You are able to delegate and have a clear and precise knowledge of the task required.
Draft the contract
Now that you have a clearly defined purpose for the contract, the next step is to prepare the first draft of the contract. If you are not certain how to go about this stage, you can involve an attorney. In fact, ensure an attorney is notified about the contract, he or she will handle the legal requirements. After the draft stage, at the authorization stage, go through the contract to ensure that there are no mistakes. Any mistake after the contract is signed might mean starting again.
Ensure you get the necessary approval before finalizing the contract
Some contracts might require that the company’s executives append their signature. Ensure you get the approval of the necessary bodies before finalizing the contract. Beyond this, if the company has some specific procedure that needs to be met, these must also be covered.
Negotiate
The key to a smooth contract negotiation is honesty and transparency. Do not give the other party involved an impression that you are trying to extort or hide something. When the contract negotiation process is built on honesty and transparency, it runs smoothly. Find the need of the other party and ensure the contract is channeled to meeting this need.
Sign the contract
This is the stage the contract is made official. At this stage, all the necessary steps must have been completed before signing. To make the process faster, companies often make use of e-signature. However, no contract is caved in stone. As such, your contract should be flexible enough to tolerate amendments in the future. Also, after the signature, the contract should be reviewed.Â
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