Dealing with Contracts: Formalising Business Agreements

Written contracts are an integral part of business transactions. When it comes to arranging between parties, a legal document is used as proof to certify the terms of the agreement so that it can be monitored how a company commits to the exchange. Since contracts are enforceable by law, you know that you should be using all your time, patience, and resources in drafting every contract you write.

In dealing with a business, multiple business functions need to be written down on paper through contracts. Here are a few business operations a contract is used to manage.

Fixed cost contracts

 

Fixed cost contracts are a form of contract that gives aid in settling on an agreement between companies when selling resources. These can range from cash to capital to material resources depending on the exchange terms. The transaction is in the form ofexchange where X number of one itemis exchanged for Y number of another resource. The standard trade between parties would be resources for cash or vice-versa. A fixed cost contract allows for negotiation of a bulk price for an order which would have to be assessed regarding world market prices to ensure that each party gets the most out of their purchase at the time of the exchange.

Service contracts

 

Service contracts are used to enumerate the duties and responsibilities that a company has in an agreement. It can range from providing service to another party, which may be an individual or another business so that the two parties are aware of specifics such as the description of the service, the price of service, the hours/days of the service’s term. Service contracts prioritise the trust that both parties will comply with a proper work result for adequate compensation.

Non-compete agreement contracts

 

Sometimes contracts are used not just to enter into agreements between each other; they’re also created to prevent transactions with other companies in the same industry. The non-compete agreement precludes a party to engage in business with a similar service that the other party provides; this allows for exclusivity when it comes to having a business partnership and secures a reliableform of employment between the two.

Newly-employed staff members are often made to sign a non-compete agreement so that they won’t be able to share trade secrets with another company in the same industry. In the same manner, a company that hires a service has to sign the same agreement so that the service provider is not cheated or replaced immediately during an ongoing project.

Having someone to watch your back

The pressure of having everything right is always looking over your shoulder, but you shouldn’t worry too much. The reason why drafts are made is so that you can find the inconsistencies and loopholes so that they won’t pop up in the final draft. Hiring commercial contract experts might cost you a little extra on your business transactions, but It’s an excellent investment to make if you’re dealing with crucial partnerships.