Understanding the ins and outs of contracts can be a full time job.  In your business having a clear understanding of the contracts you sign or your customers sign with you is crucial.  That is why it is imperative that you know what you are signing and what your rights and obligations are!

All contracts have 4 basic principles: an offer, acceptance, intentions of legal consequences, and considerations.  An "offer" is simply that; what are you offering, and what are they offering you?  This has to be definite and clearly stated.This is will determine specifically what they are doing for you and what you will do or provide for them.  Acceptance is both parties coming to an agreement on final terms.  It is important to note that a counteroffer is not necessarily a final offer, until it is accepted by both parties.  In a contract, parties can only accept what is specifically offered.  This is why it is immensely important that the offer is clear and specific.  Next is the intention of legal consequences.  This is the understanding that both parties are making this agreement legally binding.  In most cases this part of a contract is presumed and must be specifically spelled out if it is not intended.  A good rule of thumb is to consider any contract to have the intention of legal consequences unless it is clearly specified that it does not.  The final aspect for an agreement is consideration.  This is what both parties will get out of the contract.  Whether that be payment or services rendered, this is what you will provide and what you will get back under the terms.  These 4 aspects must be present in all contracts for them to be legally binding.  Some of these aspects maybe spelled out more subtly than others, but they all must be there.

Now that we know what contracts have to have in order to be binding, what else should we consider?  It is very important that you have a clear understanding of the terms and rights for both parties.  Many times we are only concerned with what we must do, and what we will receive in the terms of a contract, but it is equally important to know the rights and expectations of the other party.  Many times you will interpret the language of a contract differently than they will.  This raises two points: One, it cannot be overstated that the terms be very clear to anyone reading it.  Two, having an unbiased third party, such as a trusted attorney, review and explain the terms to you can go a long way to avoiding any of the pitfalls that a contract can bring.  

Another important issue to consider about contracts is the legitimacy of the contract itself.  Not all contracts are signed in large boardrooms in a high rise, most are between small businesses which could mean they will come in many varieties.  It could be a verbal contract on a job site that is sealed with a handshake.  It could be written on a napkin while at a business lunch.  Because small business contracts can come in many shapes and sizes, they could be interpreted in many different ways.    Having an attorney that will be a partner with you in understanding all sides of the contract can be of the utmost importance.

One final thought, why do your customers hire you to do a job for them? Because you specialize in that field and you are a professional.  We can all agree that contracts are very important to the operation of your business.  Since a contract is a legally binding document, why wouldn't you want a legal professional working with you to effectively draft or negotiate the terms of the contract?  To contact an attorney you can trust to help you with your contract needs, click here.