Writing a business agreement: 7 pitfalls to avoid

Google+ Pinterest LinkedIn Tumblr +

An agreement is an understanding between individuals to follow a specific course of conduct: whether oral or written. It is an exchange of promises which harmonizes the parties’ opinion or actions.

However more often than not, individuals who get into what is supposed to be an agreement with no clue as to what they are getting into. To help you better understand the intricacies of an agreement, here are a few hints to guide you through the next agreement or contract that comes your way, to avoid the pitfalls than may come later.

Make sure you understand the technical and legal jargons used in the contract or agreement: look up any words you don’t understand. Recognize the different legal and business terms found in standard business contracts.

There also may be financial terms and property terms. Explain the contract in your own terms as a test to see if you truly understand the whole contract.

Read the contract several times: Make sure you understand every clause used. Watch for double negatives. You don’t want to get confused by the language. Double check the dates so that you can know the real length of your contract. Find out where and when the contract takes effect.

Understand your commitments and know how to get out of the contract if needed: know which parties are bound by the contract. Understand which party you are in the contract

Know that if you accept the terms of the contract you have agreed to the terms. Watch for any conditions in the contract. Conditions means that terms change in certain situations. Make sure you are clear about these situations.

Watch out for any clauses saying you can’t sue or go to court: Find out if there are any situations that can void the whole contract. Find out if there is a non-disclosure agreement. This means you cannot discuss the terms of the contract with other people.

Check for liability a clause which means that you are letting the other party out of any liability if anything goes wrong. Make sure you understand any terms about liability and damages. For instance, you may have joint liability or individual liability.

Understand the difference between contract law and employment law. Make sure the terms of the business agreement fall into the category of contract law.

Watch out for implied terms. These are terms that are not directly stated in the contract but implied. You want to be clear about references to any fees or any rights.


About Author

Leave A Reply