A contract should be a clear legal document that sets out your rights and responsibilities and that can protect you if things go awry. Here are my tips on what contracts, of any sort, should include.
Identify the parties.
Contracts should clearly identify who is involved. It is important that a company is identified by its name, company number (ACN) and address. I recommend also including a contact person for the company that is responsible for the contract. A sole trader should be identified by the person’s name, business name and number (ABN) and address.
Period of the contract.
The contract should have a start date and an end date. If there is no set end date, then there should be a reference to this fact. If the contract applies to an ongoing relationship where work is done, or goods sold over time, then it should say so.
Terms are the story of the contract. It is important that the contract contains a description of what is being covered. That is, what is being provided, who by and to who? Terms set the expectations that must be met.
Payment terms are, of course, essential. Payment terms can include the price or the method for calculating the cost of payment and when payment should be made.
Offer, Acceptance, Meeting of minds
These are principles of law that must exist to show that a valid contract exists. There must be:
* an offer by one party to another – this is why terms are important because they explain what is being offered.
* There must be an acceptance of the terms (or offer) by the other party. This can be proved by signing a contract, ticking an acceptance, communicating acceptance in another way, or by an action that shows you are willing to proceed.
* Finally, there must be an actual agreement between the two parties, a common understanding. This is why we see a lot boxes saying ‘I have read the terms and conditions’. This will avoid a situation where later, one party says that they had a different understanding of the terms.
Dispute resolution terms are recommended when there is an ongoing relationship between the parties. It is much easier to set a process in place for disputes, when the parties are agreeing and amicable. Dispute terms include a timeframe for resolving the dispute and the steps that will be taken if it can’t be resolved, such as mediation.
These hacks apply to verbal and written contracts, and can be used when reviewing a contract that you have been given.
I can help you prepare water tight contacts that will give you peace of mind. Contact me via Email email@example.com.