The Right Contract For Your Business Is The One That Fits

Other than good insurance, the small business also needs a good form contract. 

You wouldn’t jam your feet into too-small shoes because your brother-in-law let you have them cheap. Similarly, you shouldn’t jam your business into a contract you got cheap online or from a friend, vendor or client. You also shouldn’t jam your business into an old contract that hasn’t kept up with changes in the law.  

A proper business contract will identify the risks particular to your business and business model, and protect you. If you sell products, you don’t want a services agreement, and vice-versa. The contract you re-purposed from a client may protect your customers to your disadvantage. Ditto for the re-purposed contract from a vendor. 

Your terms and conditions should be geared toward your business and its specific risks.  This is a good place to spend a few of those precious start-up bucks on a lawyer instead of hoping you found the right one online. 

Some contracts are required to be in writing, such as anything to do with land, contracts for goods worth $500 or more, and contracts for services that cannot be performed in a year. Sometimes valid contracts can be formed by exchange of email.  They can be on index cards or cocktail napkins. 

A contract doesn't have to have much to be enforceable.  It has to have the proper legal names of the parties, be signed by both parties and have a method for determining the price.  A contract should be specific enough that a third person could determine what the parties agreed to do.

A good contract, however, will contemplate where the business deal can go bad, and address these issues.  It allocates the risks between the parties, so you need to know what your worst-case scenario will cost you.  They will include provisions on how the contract can be terminated, whether late fees and attorney’s fees can be charged.