Writing business contracts require attention to detail. Today, there are many ways through to quickly create these agreements. However, the end product highly depends upon the method used to create them. This blog describes 15 tips to write successful business contracts.
Table Of Contents-
- How these tips can help
- Include all required information
- Prioritize clarity and simplicity
- Negotiate with the decision-makers
- Choose the right vendors
- Confirm all verbally agreed-upon terms are included
- Describe criteria that call for termination of the contract
- Include detailed payment obligations
- Provide a dispute resolution protocol
- Determine applicable state laws
- Use contract management software to monitor compliance
- Use preapproved, compliant contract templates
- Keep confidential information, confidential
- Select a secure contract management system
- Consider obligation, compliance, and approval workflows
- Know when to renew or audit contracts
How these tips can help
While you might already know how to create a contract between two parties, the following tips can support you in creating successful contracts that bring about best business results. This allows you to effectively use resources, save time, and increase cost-efficiency. Now let’s get started.
1. Include all required information.
While written contracts are oftentimes the preferred method, digital contracts are legally-binding in all states. Digital contracts and e-signature allow for more efficient and accurate contract management.
To avoid confusion, you should provide complete details regarding every term, condition, and obligation. This is key to avoid unwanted disputes and complications in the future. A business contract's primary purpose is to guarantee both parties’ rights and success.
2. Prioritize clarity and simplicity.
A clear and simple contract is always best. While you want to ensure that your contracts are comprehensive, many businesses run into the common mistake of overcomplicating their agreements. We suggest using simple language that is easy to understand.
Be selective with your word choice and ensure you only include important information, this way you design clear and straightforward contracts. You might also use numbered paragraph headings to give readers a clear idea of each section of the contract.
3. Negotiate with the decision-makers.
The negotiation phase is one of the most critical parts of the contract lifecycle. This means you must be able to effectively make decisions when collaborating with others on contracts. In order to save time, we suggest communicating with managers and department heads to avoid time taken communicating through the chain of command.
In this way, you can typically expedite negotiations by having instant decisions during negotiations. This also benefits both parties. Next time you speak with an assistant or a junior manager of a business, ask them to connect you to the person in charge politely.
4. Choose the right vendors.
The vendors involved play a direct role in the contract’s results. Dock 365’s Contract Management Software also offers a Vendor Management Add-on which helps you to store, analyze, and retrieve vendor data with ease. With this additional feature, you can rate vendors, create questionnaires for them, and ensure the latest information vendor data is available.
This helps you to include accurate data about parties in the business agreements, such as legal names and obligations.
5. Confirm all verbally agreed-upon terms are included.
A common mistake when writing contracts is the failure to include terms that were previously agreed upon in a formal verbal conversation.
In the case a dispute arises, the court will only consider only what is written in the agreement. Everything verbally agreed-upon and discussed will not be considered. If you think you may have failed to include something critical in the business agreement, then generate a short-written amendment. If you are yet to sign the agreement, make sure you include the change in the contract.
6. Describe criteria that call for termination of the contract.
When engaging in a contract, both parties are required to follow obligations. However, you must expect the unexpected anytime in business to mitigate risk effectively. In this way, you must describe the situations and criteria that cause contract termination.
Include circumstances when a party can terminate the contract, these circumstances typically include scenarios that are against your organization’s interest. For example, regularly missed deadlines, quality issues, and payment complications.
7. Include detailed payment obligations.
One of the most sensitive areas of a contract regards payment obligations. Obligations are directly related to the business results and the bottom line, meaning it is critical to include payment obligations in complete detail.
In your contracts, you should include payment conditions, recipients of payment, party required to submit payment, and detailed payment timelines. We suggest mentioning if there is an option to submit payment in multiple installments as well as the recommended payment method.
8. Provide a dispute resolution protocol.
Disputes can cause major problems for your business contract. A proper business contract will include ways to solve disputes. Disputes are inevitable, so it is a good idea to develop a clear dispute resolution protocol ahead of time.
Insert all dispute resolution strategies into the agreement. A common procedure is to take legal action, however mediation and/or arbitration may be a smart choice depending on the circumstances.
9. Determine applicable state laws.
In the scenario that parties to an agreement are in different states, you must determine which state’s law is adhered to in a mutual agreement. This mutual understanding will help both parties avoid unwanted legal complications. It is also necessary to mention where you will arbitrate, mediate, or initiate legal actions if disputes arise.
10. Use contract management software to monitor compliance.
Choosing contract management solutions to manage contracts and related activities is a smart decision. In today’s contract tracking software, you can find multiple app integrations made available to improve various areas of business contract management. E-signature integrations are one example. Because there are many e-signature service providers available today, make sure to select a contract management solution that is compliant with the e-signature service subscription your business uses.
Dock 365’s Contract Management Software supports electronic signature tools such as DocuSign, Adobe Sign, and Sertifi. These are the most accepted e-signature service providers, supporting our clients in quickly utilizing their investments.
11. Use preapproved, compliant contract templates.
Contract templates allow for standardized, rapid, and accurate contract authoring. By creating templates for the most common types of contracts in your business, you can ensure that your employees do not miss any specific data or documents during the contract generation process.
Along with saving the time lost by creating the contract from scratch each time, your business can also increase the accuracy of your contracts by using templates. Users can also create templates for approval workflows in Dock’s Contract Management Software. Book a live demo today to learn more.
12. Keep confidential information, confidential.
When you collaborate with another business or service, they may gain access to your organization’s sensitive information. This might include business secrets, inventions, proprietary information, and other confidential data. You must include mutual promises that ensure that both parties keep any such data confidential.
13. Select a secure contract management system.
Software-as-a-service (SaaS) is a popular modern method of delivering software services through the internet. Instead of installing and maintaining software on your server or hard disk, you can access the solution through the internet and save data in cloud servers. Microsoft 365 and SharePoint-powered contract management solutions provide a competitive SaaS experience with best-in-class security and features. With new capabilities added to these platforms monthly, Microsoft Office 365 and SharePoint-powered contract management systems are scalable and future-thinking.
We already have a blog on the topic 'How To Find the Best Contract Management Software for Your Business.
14. Consider obligation, compliance, and approval workflows.
Updating data and storing it is not enough for successful business contract management. You need the ability to assign, track, and resolve obligation requirements. Moreover, your business must be able to trigger approval workflows to ensure they are properly reviewed and changed by everyone relevant to a given project. With Dock’s CMS, you gain the ability to assign tasks to your team members regarding obligations and compliance.
15. Know when to renew or audit contracts.
One of the most important parts of contract management is knowing key dates such as auto-renewal dates and expiry dates. Your contracting software should have the ability to notify you about all key dates and deadlines. With Dock, you can create custom notifications and ensure that you audit the contracts at the right time and to make the right business decisions to get the best deals possible.
Book a live demo instantly to see how Dock365’s Contract Lifecycle Management Software does this all with ease.
