Small business owners and chief operating officers of major corporations alike create and enter into contracts on a regular basis. While some businesses rely on contracts to fund their everyday purchases, sales and services, others use contracts for mergers, partnerships and other major interactions.
As important as contracts are to daily business operations, it is critical to ensure they are valid. Contract disputes can be costly and take time away from other important duties. Making sure the contract is put together properly is vital to avoid disputes.
Necessary parts of a contract
Business contracts should contain certain elements to ensure it is legal and valid. These include the following:
- Clear and concise terms to describe what product, service or item is being sold
- Dates or timelines in which the service or transfer should be completed
- List of all parties involved in the business transaction or deal
- Amount of money to be exchanged
- Whether there is an expiration date to the offer or contract
- Any conditions or specification as to the rights and/or obligations of each party
All parties involved in the contract must sign and it is best to have those signatures notarized to ensure they are valid.
Even with all the components in place, contract disputes may occur. Whether one party waited for a period of time before accepting the terms of the contract, or entered a counteroffer, some terms may become misconstrued or overlooked. Unexpected circumstances may arise that could also cause a potential dispute in the contract.
Contract disputes may be resolved through mediation or through court litigation, depending on the details of the case.