1. Contracts provide legal protection
Contracts are your legal safety net. A well-drafted contract serves as a legally binding document, offering protection in case of breaches or disagreements. If someone doesn't hold up their end of the deal, the agreed-upon terms can be enforced in a court of law, if necessary. A detailed written contract, however, allows you to point to agreed-upon terms on a page, which can help you resolve any disagreements without going to court too.
2. Establish payment terms
It’s always crucial that everyone is clear about the money behind a deal. With a contract, you lay out the specifics about:
- How much is due.
- When payment is due.
- How it gets paid.
Your payment terms can also outline what happens when payment is not made on time or at all, or if there is an issue with the goods or services. Payment terms are critical regardless of what side of a contract you are on.
3. Scope of work
Both sides need to know what's expected. Your contract should outline deliverables, timelines, and specifics. It's your mutual blueprint of what’s expected from each side. Clear expectations can help prevent misunderstandings.
4. Protect intellectual property
Contracts ensure that what's yours stays yours, from logos to business strategies. Your contracts can include terms regarding the ownership and use of intellectual property. This includes:
- Copyrights.
- Trademarks.
- Patents.
- Proprietary information.
5. Maintain confidentiality
In the business world, information is power. A solid contract can ensure that shared business secrets stay secret and don’t end up in someone else's inbox. Whether you use a separate Non-Disclosure Agreement or Confidentiality Agreement, or it’s part of a larger contract, these can protect your sensitive information during the course of a business relationship, and after one ends too.
6. Professionalism & credibility
When you present a contract, it sends a message to your clients, suppliers, investors, and other key stakeholders. It says you're serious, professional, and you value the relationship. People remember how you make them feel. When your clients and partners feel like they can trust and rely on you, you’re building a stronger business relationship.
7. Exit strategies
Business relationships don’t last forever. A contract outlines how to part ways gracefully, and on friendly terms, ensuring both sides are protected and minimizing disputes. Putting in contract terms that explain how a business relationship can or will end can go a long way to preserve that relationship, as well as provide predictability for all involved.
8. Dispute resolution
Disagreements happen. You can establish a roadmap for resolving disputes and disagreements, be it mediation, arbitration, or other methods. You want to avoid going to court, if you can. Your roadmap can be focused on contract management and finding solutions, not more problems.
You don’t have to reinvent the wheel.
Rocket Lawyer has affordable, customizable, and e-signable legal documents available for hundreds of different purposes, so you’re never starting from scratch. A Rocket Lawyer network attorney can also review your contracts and address any concerns, questions, or potential issues. Plus, when you sign up for Rocket Legal+, you get up to half off attorney services and more. If you have more questions about your business contracts, reach out to a Rocket Lawyer network attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.
