If you own a business, it is extremely important to understand and embrace the key elements of a legally valid, and enforceable, contract. The information below summarizes the five key components that virtually every contract should have for your business to operate successfully.
No. 1 –Written Agreement Between All Parties
Arguably the most important component to any business contract is that the agreement and terms between the parties are in writing. Please understand that a handshake verbal agreement means very little in a court of law. Not only may there be enforce ability issues based on legal principles it will be extremely difficult to prove your version of the facts.
No. 2 – Specific Terms and Provisions
Your business contract should feature specific and detailed terms and provisions. This includes everything from naming the correct parties involved to the rights and obligations of each side beholden to the contract. Depending on the type of contract, this can include employment terms, inventory and supply terms, lease agreements, and more.
No. 3 –Contract Termination
It is important for your contract to include specific terms detailing what would be considered a valid termination of the contract. This is imperative since circumstances may arise in which you no longer wish to fulfill the terms of the agreement with another party (or vice versa). As a result, it is necessary to include terms in a contract for when a party can legally terminate the contract without necessarily triggering a breach of contract claim.
No. 4 – Dispute Resolution
Many business owners will encounter legal disputes with employees, vendors, the government, and so forth. As a result, it is important to make sure provisions specifically addressing what is to be done to resolve such disagreements in the most efficient and economical way possible. For example, you may want to consider including an arbitration provision in the contract, or a mediation provision. You also should pay close attention to governing law and venue that would apply in the event of a contract dispute.
No. 5 – Confidentiality Clause
A confidentiality clause can prove to be invaluable, especially if you are a business that is engaged in rapid growth and have hired several new employees and executives. Why? Because those parties will become privilege to sensitive business information during the course of their employment that could hold significant value to a competitor. When you incorporate a confidentiality clause into every contract, it reduces the risk that a former, or current, employee will steal or appropriate your protected business property for their own use.
Need Help Drafting a Proficient Corporate Contract? Contact the Hakim Law Group Today
Drafting a detailed, thoroughly vetted and legally-valid contract can be challenging, especially if you are a business owner or high-level executive with other competing priorities. Hence, it is in your best interest to retain the services of a reputable business lawyer in Los Angeles. Hakim Law Group represents an array of entrepreneurs, operating companies, venture capital firms, and financiers in the education, fashion, finance, health care, internet and social media, technology, real estate, and television industries. Whatever business issue you need addressed, the professional business attorneys at HLG are here to help. For further information or to schedule an appointment please contact Hakim Law Group at 310.993.2203 or visit www.HakimLawGroup.com to learn more.