Small Business Basics: How to Create a Form Contract

hands of a businessman holding a pen in the middle of a business discussion

It’s common knowledge that small businesses bring in lesser receipts than bigger companies. But small businesses could still experience contractual disputes concerning money, which could result in many issues. These include spending thousands of dollars just to resolve the dispute.

To avoid this issue, most businesses, regardless of size, utilize a form contract, which is a basic template they use for all of their vendors and clients. Drafting a form contract requires the following considerations to help avoid running into complications later on.

Professional Assistance

You must seek help from a business attorney in Denver when drafting a form contract. You wouldn’t want your form contract to have loopholes that could lead to you being exploited or facing legal repercussions later on.

Presentation of the Form Contract

Put simply, your form contract needs to look professional, so use standard font and typeface. When using it for different individuals or entities, take your basic form contract template and then customize some of the content accordingly.

Language

Keep the language simple and straight to the point so that people will easily understand the content. Not using legal jargon will also reduce the length of the content.

Payment Terms and Potential Issues

This part of the form contract is usually the most crucial and rightly so. With this in mind, make sure that you include the exact amount to be paid and how and when it should be paid. If you impose penalties like one-off fees or interest, include this in the contract. Remember that the majority of contractual disputes occur due to the simplest payment issues.

Representation and Warranties

Try to cut down on things about product representations and warranties. Just state the facts to prevent someone from using the contract against you in case it becomes evidence during a case. It’s also best to highlight liability limitations. For instance, in the event that a client isn’t satisfied with your product, you need to clearly allocate liability or what you’re going to be liable for.

Force Majeure

This will safeguard your business from unexpected events and must be included in all of your contracts. These events are basically “Acts of God.” For instance, if a raging storm hits your office and destroys it, a client can’t hold you legally liable for any inconvenience that resulted due to the raging storm. Statements like these are standard in all sorts of contracts.

Resolving Disputes

business partners reviewing a contract
This last section must include information regarding how your company will address and resolve potential disputes. You can’t deny the possibility of having to face disputes in the future, so you should have a clearly defined and solid process for managing them when they do occur. You probably already have a dispute resolution process in place, so make sure to include this in your form contract.

Create a basic form contract template following the guidelines above that you can customize to the specific needs of each vendor or client. Make sure to draft your template with help from a business lawyer to reduce the risk of legal issues and disputes cropping up in the future.

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