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3 key elements of a good contract

On Behalf of | May 11, 2023 | BUSINESS & COMMERCIAL LAW - Business & Commercial Law

Having (or not having) solid contracts could mean the difference between business success and failure for your business. You need these legal documents for pretty much every business relationship you have. 

Yet, many companies run with contracts that will not protect their needs when they need to call upon them. Here are three top elements to consider including:

1. An end date

It might seem odd when you are only just making the contract to think about the end, but a final date is crucial. Let’s say you supply parts to a large manufacturer. You don’t want to be tied to selling to them forever at the same price, or when a far better offer comes along.

End dates do not necessarily mean the contract has to end, but they allow either party to reconsider their position without penalty. If things are going well and you wish to continue, then you can renegotiate the terms. Or if it’s time to move on, you can do so without penalty.

2. Terms of renewal

Sometimes you need to know that you can continue the contract without facing a massive price hike. One such example is when you rent premises from a commercial landlord. Let’s say you run a restaurant. Having to move in a year would be highly detrimental, but the landlord is unlikely to want to keep the same price. Agreeing in advance as to how much they can raise the rent by, and how often, gives you both security. It allows you both to plan out your finances.

3. A method to resolve disputes

Disputes can often occur in business. Many business owners decide to make turning to mediation or arbitration the obligatory way to solve the issue, rather than risk it ending up in court. 

Those are just three of the many things to consider when creating a contract and it’s best to take legal advice to ensure you include everything that you need.