Good contracts keep your business running smoothly and increase your chance of success. When running a business in New Jersey, your contractual relationships are often long-term. This requires trust between both parties.
A business contract should protect your business interests but be fair to both parties. This helps preserve your business relationships. Here are some tips for writing your business contracts.
Avoid verbal contracts
Your business contracts should be in writing. Although oral contracts are sometimes enforceable, the terms are often difficult to prove. Additionally, you may not remember the terms and you risk the other party misrepresenting your agreements.
Use simple, but detailed language in your contracts. Business contracts do not need to contain complicated jargon or legalese to be valid. Write your contracts in plain language that is easy for everyone to understand.
Generally, detailed language reduces the chance of future misunderstandings or conflicts. This is especially true with language involving payment terms.
For example, if you want payments to be made a certain way, such as credit card only, specify that. If payments are to be made in installments, list each day and amount exactly.
Protect confidential information
Business contracts should include a confidentiality clause. Many business contracts contain confidential information about the business, such as trade secrets. Be clear that the other party is not to share any confidential information about your business.
Include language about attorney fees and costs if disputes arise. Additionally, a mediation or arbitration clause is a good idea if you prefer to try to resolve disputes yourself before taking them to court.
Finally, make sure all terms of your agreement are legal. They must comply with New Jersey state law. If you and the other party reside in different states, your contract can specify which state’s laws will apply. This is often called a choice of law provision.
There are many clauses that make up a good business contract. These are just some ideas to get you started. You should always have your contracts reviewed by a professional before signing.