A well-drafted business contract can protect your company while allowing you to participate in a profitable endeavor. Still, you should make sure that your contract works as you intend it to. Mistakes made in drafting its terms and provisions could leave you with an unviable agreement, or worse, expose you to litigation.
It is important to review a business contract from top to bottom. Still, there are some areas in a contract you want to pay close attention to. TechBullion describes some sections that may benefit from extra scrutiny.
Check for blank areas
Your contract should be complete before you sign it. Be aware of any blank sections that another party could fill in later after you have signed the document. This could alter the terms of the document to your disadvantage. If you are drafting the document, fill in any blank sections you find. If another party is composing the document, be sure to review it and then inquire about any blank areas.
Check for party identifications
A contract can lose its enforcement power if it does not correctly identify the parties involved. Review your contract to see if it correctly names you and your company as well as the other parties participating in the contract. A wrong name can cause a legal nightmare if the other party claims the contract does not identify them correctly, so it does not bind them.
Check for state law applications
In the event of a contract dispute, you should know which state’s law will apply. This should be simple if both companies reside in the state of Oregon. However, if you are dealing with a business from another state, the contract should describe which state’s laws will govern the contract. If not, you might run into problems if you need to litigate or negotiate the contract further.
Check for payment terms
A good contract should be specific in how the parties involved will get paid. Look for provisions such as when you will receive payment, how much you will get paid, and the method used to pay you. Do not overlook any detail. If something in the contract looks unclear, it may cause a delay in payment or worse.
Because business relationships vary, your contract may be simple or complex. Nonetheless, a close review may diminish the chances that you will encounter legal problems going forward.