Business Contract Basics - Important Points to Remember When Putting Together a Contract

Summary

This video script offers practical advice on handling contracts with customers. It emphasizes the importance of obtaining proper signatures from both parties, ensuring the signer has authority to bind the company. The script outlines key contract elements: start date, duration, detailed service/product description, pricing, payment terms, and mailing addresses. It also advises on avoiding rushed agreements, considering changes with an open mind, and seeking second opinions to ensure the contract's success and integrity within the organization.

Takeaways

• 🔖 Contracts can be intimidating at first, but practice makes them easier to manage.
• ✍️ A contract requires signatures from both the client and the service provider to be valid.
• 📅 Contracts should include a start date, duration, detailed descriptions of services or products, pricing, and payment terms.
• 💰 Clearly outline what is included and excluded in the price, and consider offering discounts based on conditions.
• 📮 Include accurate mailing addresses for both the client and the service provider.
• ✅ Ensure that all signatures on the contract are authorized to commit to the terms.
• 📝 All promises and agreements must be in writing; verbal agreements are not binding.
• 🔍 Carefully review all changes to a contract, even minor ones, to maintain integrity.
• 🤝 Always be open to new approaches and ideas during contract negotiations.
• ⏳ Avoid rushing contract negotiations to prevent last-minute concessions and ensure thorough consideration.

Q & A

Why is it important to have both the client and the service provider sign the contract?

Both signatures are crucial for the contract to be legally binding. The client's signature indicates agreement to pay for the received product or service, while the service provider's signature confirms the ability to deliver as per the contract terms.

What does the phrase 'authority to bind the company' imply in a contract?

This phrase serves as a reminder that the person signing the contract must have the legal authority to commit the company to the terms of the agreement.

What are the basic elements that should be included in every contract according to the script?

The basic elements include a start date, contract length, details of the product or service, price, payment terms, mailing addresses, and approved signatures.

Why is it essential to specify the price and what it includes in a contract?

Specifying the price and inclusions ensures clarity on the cost of the service or product, and helps avoid misunderstandings about what is covered by the stated price, including any discounts or additional terms.

How do payment terms in a contract ensure a balance between service delivery and payment?

Payment terms establish a timeline for when payments should be made, ensuring that the service provider is compensated in a timely manner after delivering the service or product.

Why is it necessary to include mailing addresses in a contract?

Mailing addresses are necessary to ensure that both parties know where to send invoices or payments, reducing confusion and saving time in the transaction process.

What is the significance of having approved signatures in a contract?

Approved signatures ensure that the individuals signing the contract have the authority to make such commitments, reducing the risk of disputes or invalid agreements.

Why is it important to get promises and agreements in writing within a contract?

Written promises provide a legally binding record of what was agreed upon, ensuring that all parties are held accountable to their commitments and reducing the risk of disputes based on verbal agreements.

How can one protect against unauthorized changes in electronic contracts?

By reviewing the entire document for any changes, not just the red-lined sections, and ensuring that the number of pages and the alignment of words remain consistent with the original document.

What should be done when changes are made to a contract during the negotiation process?

Any changes should be mutually agreed upon by both parties and initialed to confirm acceptance. This process helps maintain the integrity of the contract and ensures that all modifications are recognized and accepted.

Why is it advised to avoid rushing through contract negotiations?

Rushing can lead to oversights and concessions that may not be in the best interest of the parties involved. Taking time to review and understand the terms can prevent future issues and ensure a more balanced agreement.

How can involving other parties within a company in the contract review process benefit the organization?

It allows for a broader perspective and knowledge sharing, which may highlight potential issues or opportunities that were not initially considered, leading to a more informed and successful contract management.