Business Law Question – What Kind of Terms Do I Need in My Contract for XYZ Transaction?
Well, as every lawyer will tell you: it depends. The answer to your question involves asking yourself a list of basic questions. Before you can determine what kind of terms your contract will need, you should ask yourself specific questions about the transaction:
Questions to Ask Yourself
- What is the subject of this contract? (Ex. Is it employment? A business partnership? Products or services?)
- Who are the parties?
- What does each party give/take?
- How long is this agreement in effect? What is the term?
- Why are we entering into this agreement?
- When can either party terminate this agreement? Under what circumstances?
- If the other party doesn’t perform/ fails to fulfill their obligations under this agreement, what are the remedies I want for their breach?
- What kind of situations can arise out of this contract? (Ex. Could a 3rd party get hurt if the other party fails to keep their promise to me?)
- If something goes wrong in our business relationship, what is the worst-case scenario for me?
- What kind of relationship have we created from this contract? (Ex. Agency, independent contractor non-employee, partners, etc.)
Every Contract Should Have…
Then at a minimum, you should include: the names & addresses of the parties, the date of the contract, the time period in which the contract is effective (i.e. The term), the basic terms of the agreement (who is paying how much to whom for which products or services), payment terms (is payment up front, COD, installments, Net 30, etc.?), grounds for termination, consequences of breach, remedies for the innocent party, and maybe some optional terms about indemnity and insurance requirements.
If you have any questions about a contract you’ve already written for your own transaction OR about a contract you’ve already signed, and you are wondering if you are adequately protected OR if you’re exposed to liability, please contact the Law Offices of Gahram Kang, a PLC for assistance.
Gahram Kang, Attorney at Law