5 Essentials of Effective Contracts
Effective contracts generally share the following 5 basic qualities:
They are clear and easy to understand:
Having a contract with confusing language can lead to breach of contract lawsuits asking the court to determine the contract’s actual meaning.
On the other hand, if a contract clearly states what the parties intended, the parties can look to the contract, and if everything is clearly spelled out, it usually will resolve the dispute there without the need for a lawsuit.
2. They are comprehensive:
Everything intended by the parties in the agreement should be specifically explained in the contract.
3. They are specific:
On a related note, make sure your contract is super specific about the exact services you are providing. If your contract doesn’t do this, it could lead to scope creep (when clients expect you to do more work than you actually agreed to for the agreed upon price, and I know you don’t want to work for free!)
Also be super specific about how and when you will be paid. A client won’t pay you unless they know when and how to pay.
This tip will also save you a ton of headaches: make sure you have a clear refund and cancellation policy that also allows you a way out if your client doesn’t pay, ghosts you, or is too much of a pain.
4. They anticipate disputes and choose the methods in which they will be resolved.
Also make sure to specify how the parties will resolve any disputes that come up. For example, you can usually specify where any suits must be filed, and you can agree to go to mediation or arbitration prior to being able to file a lawsuit against the other party.
5. They are signed:
Lastly, make sure your client (or an authorized representative of your client’s company) signs your contract! Although verbal agreements can be enforceable, having a signed contract that’s in writing is clear evidence of the agreement between the parties.
It’s also a good idea to speak with an attorney about your contracts. That way, you have peace of mind that you have everything you need in your contract to help protect your business.
Want more information? Book a consult or download our free Contracts Guide.
This information is provided for general information purposes only and should not be construed as legal advice with respect to any matter. This information is not intended to be an exhaustive list of the topics discussed. It does not create an attorney-client relationship and should not be used as a substitute for legal advice in any specific situation.
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