As a small business owner, ensuring you have valid, fair and watertight contracts with your manufacturers, suppliers, customers, client, employees, and/or contractors is a vital part of your business success. So at Legally Yours, we have teamed up with our fixed-fee commercial lawyer, Fiona, to provide 6 contract hacks to assist you in this process.
So let’s start with the basics… what exactly is a contract? A contract is a legal document that sets out the rights and responsibilities of the parties to the contract. It has to contain an offer, acceptance, and a consideration (usually the dollar value), as well as incorporate protections for both parties in the event that the contract terms are breached.
Below we have set out 6 easy contract hacks that will assist you when entering into contracts as a small business owner:-
Hack 1: Clearly Identify all the Parties to the Contract
That includes the company names, the ABNs, addresses and a contact person for each party to the contract. If one of the parties is a sole trader, you must include the person’s name as well as well as their business name.
Hack 2: Include a Defined Contract Period
Always make sure that you have a defined period of the contract i.e. include a start and an end date to the contract. In the event that it is an ongoing contract, you must ensure that you clearly state this and then this becomes the definition of the defined period of contract.
Hack 3: Outline the Terms of Contract Clearly
Think of the terms like a story. You need to outline who is providing what to whom and how the terms will be carried out and by whom etc. The more detail in the terms the better!
Hack 4: Specify the Payment Terms of the Contract
Payment terms are an absolutely essential part of a contract. These can include the price, the method of calculating the costs of the payment, and/or when payment should be made and the like. The clearer you are in relation to the payment terms within the contract, the better it is!
Hack 5: Offer & Acceptance
Clearly outline the offer being made and the acceptance of the other party of that offer. Acknowledging how the party has accepted the offer in the contract is an integral part of the whole deal. Without this component, it could be very easy for the party who is accepting the offer to assert that they didn’t realise what they were accepting. Having them tick a box after the offer is stated acknowledging their acceptance is a good way to achieve this, or you could specify that by them performing some specific action, such as making a deposit payment, then this indicates that there has been a ‘meeting of the minds’ and the offer has been accepted.
Hack 6: Outline the Dispute Resolution Process that will be Followed if Contract is Breached
It’s much easier to set out the terms of the dispute resolution process when you’re not in a dispute with the other party of the contract. So doing this at the beginning when you are first entering into a contract is the best way to ensure that there is agreement about the steps that can be taken if one of the party breaches the terms of the contract. We recommend you include a time frame in regards to resolving the dispute, as well as what steps will be taken to resolve the dispute e.g. mediation, etc.
For watertight legal contracts, we would always recommend having a consultation with a commercial lawyer to assist you with the drafting or review of contracts for your small business.
If you would like to book a Quick Match please follow the links on the Legally Yours website.
This article is written by Karen Finch and was first published on the Legally Yours website.
This article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area. If you require any advice or information, please speak to practising lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Legally Yours Pty Ltd accepts or assumes responsibility, or has any liability, to any person in respect of this article.