Business transactions once relied on verbal agreements and even handshakes. In today’s world, the safest way to secure commercial transactions is with binding legal contracts. Learn more about what makes contracts so important and what they should entail to prevent complications.

The Necessity of Contracts

Think of a contract as a type of business transaction insurance. It ensures you and all other parties provide the agreed-upon services, products, or payments within a designated time frame. A contract sidesteps misinterpretations about what each party will provide while also promising that the participants will keep some or all parts of business dealings confidential.

Contracts offer peace of mind because if one party doesn’t uphold the written agreement, they will face legal issues over breach of contract. When one party can prove the other didn’t adhere to the contractual agreement, it avoids litigation issues that cost time, money, and aggravation.

What They Should Outline

Quality contracts go over the services each party will perform in detail; for example, a building contractor would write the scope of work regarding a home addition or detached garage. Contracts include project timelines and due dates or at least estimated completion times in light of factors such as poor weather or material accessibility.

They also specify payment for services rendered, including when payment can be expected and how much the party will receive.

The document should include which party members are responsible for what dealings, and what actions or lack of action can result in contract termination.

Exhaustive contracts should include the repercussions for failing to meet specified terms as well, such as paying late fees or facing breach of contract suits. 

Draft contracts for business transactions with assistance from Donald L. Spafford, Jr., Attorney at Law in Honolulu, HI. Offering over 30 years of experience, this lawyer and his team handle a variety of legal cases, including contract disputes and commercial bankruptcy. Call (808) 532-6300 today to schedule a free consultation, or visit the attorney online for more about business transaction services.