Contracts - the Basics
Small business owners tend to shy away from signing
any contracts, but this is a risky way to do business.
When you are making a major product or service sale or
purchase, you need to get the details of the transaction
in writing. If you don’t, you will inevitably find
yourself in the middle of a heated discussion over specific
terms. Does the purchase include freight costs? Can sanctions
be imposed if delivery isn’t met? What if the services
rendered are considered unsatisfactory? In many cases
a purchase order and/or a written estimate will provide
the answers to these types of questions and serve as a
For small, routine purchases and sales, you may wish
to have an attorney review the basic purchase order or
sales documents that you will be using. For larger or
unusual transactions, you may wish to have your attorney
review the contract you intend to use, or even draft it.
For more important contracts, retain the original copy
containing the original signatures from all parties. In
many situations a photocopy or even an agreement without
signatures offers proof of a purchase or sale agreement,
but nothing can beat an original copy as legal protection.
Any substantive changes to a contract should be noted
in writing. If they are in the body of the contract, then
each change should be initialed by all parties involved.
If it is in the form of an addendum, it should be signed
by all parties involved. A contract should specify that
it represents the entire agreement between the parties
and that any changes must be in writing.
To avoid court and the legal costs associated with lawsuits,
contracts should, generally, have a clause specifying
that disputes will be arbitrated. The method of arbitration
should be stated and the results of the arbitration should
be held binding.
By Source Streetwise Small Business Start-Up