Commercial law plays a significant role in determining how you run your business operations and how you interact with other businesses, customers and the general public. A critical aspect of commercial law is the drafting of agreements. Typically, these are official arrangements that describe the relationship or transactions between your business and another. Below is an excerpt detailing how to draft commercial contracts and how you can protect your interests using these contracts.
Ensure That The Contract Meets The Legal Requirements
For the contract to be legally binding, it must meet the minimum legal requirements. Ideally, the agreement can only cover a legal business transaction. As such, you cannot create a contract detailing how you will smuggle drugs. The parties in the contract must be of sound mind. Additionally, neither party should coerce the other into signing the agreement. Each party should also have sufficient time to read through the contract.
Describe The Transaction In Detail
A mistake made by many business people is failing to describe the nature of their transaction or including vague details. Your contract must be thoroughly detailed. Remember, the document acts as a reference point if one party defaults the terms of the agreement. For example, if you will be selling product X to customer Y, ensure that the contract indicates the volume and specifications of the product, the agreed selling price, the delivery date and location and when customer Y should make payments.
Contingencies are conditions that a party needs to fulfil before the contract expires. For instance, when buying property, a contingency would be that the seller has to renovate the property before you make the final payment. Alternatively, you could ask the seller to pay all property debts.
Include A Dispute Resolution Mechanism
Changing circumstances could force a party to breach the terms of the contract. You should prepare for such incidences by creating a dispute resolution mechanism. Negotiation is a straightforward and quick way to settle commercial disputes. However, when this is not possible, you should seek the intervention of an arbitrator. The primary benefit of arbitration is that it is cheaper than a court process, and the arbitrator's decision is final.
Consider The Services Of A Commercial Lawyer
As observed, drafting a commercial contract requires a lot of caution since the agreement contains many intricate details. As a business person, you may not have the experience needed to draft commercial contracts. For this reason, you should hire a commercial lawyer to negotiate the terms of the agreement and ensure your concerns are included in the document.
When drafting commercial contracts, meet the legal requirements, describe the transaction, include a dispute resolution mechanism and consider the services of a commercial lawyer.