Contracts - an important part of doing business.

If you are in business than you have probably been burnt once or twice, unfortunately this is just a part of life.  No matter what you sell or what type of service you provide you will always find those that are unhappy, no matter how hard you try to please there are some that cannot be satisfied.  In situations like these it’s critical that your responsibilities to the client are spelled out and in writing.  This is not only for your protection but their protection as well.  Contracts are the basis for business and have been in use since ink touched paper, they provide not only peace of mind for the buyer but the legal protection of all parties involved.  If you are not using them you should think about starting, without some type of contract between parties you are left unprotected and defenseless against anothers whim, confusion or misunderstanding.  You will be left with a he said she said scenario and that’s not good when you are talking dollar and cents.

Here are some best practices when dealing with contracts:

1) READ THE CONTRACT – ALL OF THE CONTRACT – NOW READ AGAIN. Signing something you have not read is foolish and typically occurs with the inexperienced, you cant cry foul later when you realize you have agreed to something you would not have had you actually read the contract.  This is common sense, read before signing.

2) ASK QUESTIONS – GET THE ANSWERS. Ok, so you have read everything within the contract but do you understand it? If not you must ask questions and get the answers you need PRIOR to signing.  What’s the use in signing something if you don’t understand it’s true meaning,  be sure you know what is expected by both parties prior to agreeing to terms.

3) FOLLOW THROUGH – Now that you have made an agreement you must follow through on your part.  Failure to do so may result in your defaulting, this could have legal consequences and penalties.  Your responsibility may simply be to pay for a service, if so be sure to meet your payment deadlines so that you remain true to your agreement.  Your responsibility may be to provide a service, if so be sure to provide exactly what is detailed in your contract, nothing more and nothing less.  Be true to your word.

4) DEMAND COMPLIANCE – You have entered into a contract and the other party has defaulted, you must be prepared to take action on your behalf.  Before you go guns blazing try and work things out with the other party, they may not even realize they have failed to live up to their end.  Consider a compromise, this is something that must be seriously considered prior to altering your contract and is taken on a case by case basis.  Be prepared to defend your business, this is best done with the help of an attorney.  Your attorney will know best how to proceed and will ensure your rights are protected.  This is when your contract will matter most, every line will be scrutinized. Draft your contracts carefully and be sure you cover all areas of concern.

5) KEEP GOOD RECORDS – Once you have created a relationship be sure to keep good records.  If a problem occurs months after an agreement has been struck you may need to refer to these records.  They will be most helpful in resolving any potential problems.  People tend to have selective memories especially when money is involved.  You want to be able to access information quickly and when you need it.  Keeping good records is part of being professional.  You can use the old filing cabinet system or opt for some fancy new digital scanner.  Failure to keep good records is just asking for trouble, some states even require by law that certain documents be maintained for certain periods.  Check with your local town hall for more information on your responsibilities regarding record keeping.

Clearly contracts are and always will be an important part of doing business.

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