Free 30 Minute Consultation

(650) 332-2994

Se Habla Español

The Dos and Don’ts of Creating New Client Contracts

Photo of an Office Meeting

When it comes to doing business, contracts are the foundation of every strong business relationship. These documents set up the expectations between parties, outline how to handle disagreements and protect everyone involved. Knowing how to create a contract is going to be essential for the smooth operations of your company. Below, you’ll find strategies that can help you build contracts that are strong and protect you and your interests.

Could Standardized Form Contracts Be Right for Your Business?

If your business is repeatedly providing the same goods and services to the clients that hire you, having a standardized form contract can be a good plan. The concept allows you to develop a single contract that multiple clients can use. By filling in pertinent information such as the client’s name, project start date, contract length and invoicing instructions, your business can save time and money when it comes to writing contracts.

However, this strategy only works if the standardized contract was written well and accounts for the protections your business needs. This means simply purchasing or downloading a template online is a dicey proposition. You should always acquire the services of a competent business lawyer to help you draft the standard form document that will best suit your needs.

Why Both Parties Need to Discuss the Terms

If the services or goods your business supplies are more niche and client-oriented, a contract written for the occasion may be in order. These types of business agreements are not developed in a vacuum, and both sides need to have full input. This is the time to discuss payment schedules, what will constitute the end of the project, what milestones will indicate that the agreement is being properly fulfilled. Remember, a contract doesn’t just protect your business, it protects your client as well. So, discussing what happens if budgets are busted or deadlines are missed by either party is a must.

How to Create a Contract That’s Specific and Not General

Contracts can help you establish what you are doing for a client and how you plan to do it. This sets up expectations, which can foster good business relations when those expectations are met. However, if the client is unsure of what they should expect, it can lead to conflicts and lawsuits. For this reason, you want to be very clear on what you will be delivering to the client and what the scope of the project is.

Avoid using generic terms that are open to interpretation. If the contract says your company will “develop a coil over shock absorber”, a client could interpret that as designing, prototyping and testing said device. If your company is only equipped to handle the design phase, you could find yourself in a dispute with your client. Being specific avoids this problem, i.e. saying: “We will design the mechanisms for a new type of coil-over shock and deliver blueprints.”

Why Are Contract Termination Details Important to Creating an Agreement?

You should also determine under what circumstances should your contract be dissolved early and by what means. Will there be a cancellation penalty? How will financial obligations be settled? Who will pay attorney fees if a lawsuit should result? These are just the beginning of the questions you need to answer while creating a contract. If you address these issues before these conflicts arise, then there is a better chance that your business relationship with the client can continue in the future. You may also earn the reputation of effectively handling business disputes—another win for your company.

What Is the Best Way to Build a Contract?

When trying to figure out how to create a contract that will work for your business, these tips are a good start. However, the best piece of advice when it comes to drafting a contract is always consult an experienced attorney. They have a working knowledge of contractual law, so a lawyer can determine the proper language that will best protect your interests. Our Redwood City business counseling lawyer has negotiated contractual terms for several companies. Drew Winghart believes in becoming intimately familiar with your business to help craft the best contract for your company’s needs. To find out more about this process, call (650) 332-2994 for a free 30-minute consultation.

Archives

Archives