Your company is doing well. Your online and offline traffic is excellent, you are getting more and more referrals, and your revenues are skyrocketing. Your company’s success is undeniable.
Your company is now an authority brand. Companies are approaching you, requesting or partnerships. While you may decline some, you notice that a couple of others that are ideal and beneficial for your brand. You are interested.
Before signing the agreement or discussing the finer details of the contract management, you need to do the following:
- Conduct Background Research
One of the first things you should do before entering into a contractual agreement is to do due diligence.
What’s the company’s credibility? How efficient are they in their service or product delivery?
Dig deeper and find out a few other things.
Are you entering into a partnership with an individual or a company? If it’s a company, is it a profit, non-profit, or charity organization? What’s the position of the company representative who will be signing the contract?
Also, you need to look at the financial capabilities of the company. Will they be in a position to honor their responsibilities? What about their likelihood to cater to any damages that are their fault?
There are more than a handful of questions you need to ask yourself before forging a partnership. By conducting a thorough background on the other party, you gain valuable information to gauge whether they are the best fit for your company.
- Understand the Details of the Contract
A significant percentage of failed contracts result from either or both parties not fully comprehending their duties and responsibilities.
So, before you get into a contractual agreement, you need to outline the role of each party clearly; and the best way to go about this is by veering off oral contracts and embracing written contracts.
Disputes may arise at any time. In such a case, a written contract provides proof of the obligations that each party needs to fulfill. With the terms and conditions also clearly stated in the document, parties can clarify any misunderstandings quickly.
If you feel that you are not being able to get a complete sense of the contract, it would be best that you hire business lawyers. According to experts, entrepreneurs might not have the best idea on legal issues and knowledge. If they are signing something important, they need to get expert legal guidance to help ensure that nothing goes wrong because of the terms of the contract. If you are looking to hire a new business lawyer, know more.
- Make sure you identify all parties correctly
Know who you are getting into an agreement with.
The importance of using legal names in a contract cannot be over-emphasized. If you are forging a partnership with a close friend or someone you know, do not assume their name. Everyone should be able to show some form of legal identification. These are the names that will be written in the contracts.
Doing so puts you in a safe place in case you need to take legal action.
Also, sometimes, a company may send a representative to negotiate a contract. If you realize that the person is a junior and has to confirm the contract details with their superiors, insist that the owner signs the agreement. If it’s a large company, the CEO should do it on behalf of the company and not as an individual.
- Have a Lawyer
Contracts are sensitive, which is one of the reasons why you should seek guidance from a lawyer. The lawyer will help in drafting the agreement to give it a more professional feel.
They will also help outline the documents and primarily enlighten everyone on the legal repercussions of a breach of contract.
- Understand Payment Obligations
Money is often a common cause of problems in a contractual agreement, which is one of the reasons why you should spell out the details.
Each party needs to understand when they are supposed to honor payments. To avoid confusion, the parties should discuss the best payment method and whom to pay.
Are partial payments allowed? When are the payments supposed to be made? Is it weekly, monthly, or after a certain order amount is reached?
- Expiry date and termination triggers
Clearly defining the expiry date of the contract is of paramount importance. It is then that the parties can decide whether the partnership was fruitful and should continue or not.
Also, considering that disputes might occur, it is crucial to outline the circumstances that might cause a termination of the contract. Again, the lawyer plays an integral part in this case as they will explain in detail the legal repercussions of each scenario.
Furthermore, you need to discuss the penalties each party will be subjected to if they breach the contract.
These are some of the important things you should consider before signing a contract. Others include deciding the state law that will govern the agreement. This is particularly important if the businesses are in different states or countries.
Since each company is sharing some of their sensitive information, remember to include a confidentiality clause.
Do these things and they will increase your chances at forging mutually beneficial partnerships with other brands.