Businesses will, at one point or the other, be required to use contracts, whether it is in starting a fresh venture, or amending existent contracts. Due to the nature of contracts, it helps to get legal advice prior to plunging one’s self and making a binding commitment. The good news is that Sydney is home to some of the best lawyers globally. In order to make the right decisions, entrepreneurs will find the sections below to contain valuable insight into what business contracts entail.
What is the definition of a business contract?
A business contract is an agreement between two or more parties that legally binds them to a set of rules that govern a specific transaction. Such contracts are also known as commercial contracts, and they exist in two formats. The first is a contract that stipulates the terms of a one-off transaction, while the second is applicable to regular transactions that span out over a considerable period of time.
From the two contract formats, there are various types of business contracts including, but not limited to, commercial leases, partnership agreements, joint venture agreements as well as service contracts among many others. Each of these contracts differs in terms of structure, but all require advice from a legal perspective if entrepreneurs are to get the most of their businesses.
Stages of developing a business contract
Lawyers Sydney will always advise that clients go through each of the three stages below carefully, making sure not to omit any details. The stages are as follows: information exchange, negotiation and preparation of the contract. The first stage, information exchange, involves the coming together of the concerned parties for the purpose of sharing crucial and confidential information.
In the second stage of setting up the contracts, the parties involved will discuss the relevant terms and conditions of the contract, as well as define the rights and duties for each party. This often takes place in the absence of the respective lawyers, but it is important to take into consideration the legal status of each of the parties.
The last stage is the actual writing of the contract. This is the step in which the involved parties will get their lawyers to work on the written document, taking into account the matters discussed during the negotiation stage. At this point, the legal team working for the respective parties will identify any issues that may require clarification, thus leading to further discussions. When both the lawyers and parties are content, the business contract is finalized, and the parties get to sign the document.
What is the validity of a verbal business contract?
While a verbal business contract is just as admissible as a written one, there are unique challenges to the former. Lawyers will often advise their clients to settle for the latter. This is for the simple reason that with verbal contracts, neither party can give evidence of the contract particulars in the event that there is a misunderstanding. Written contracts provide evidence, thus helping reduce conflicts in later stages of the business relationship. Choosing a great lawyer cannot be overemphasized in today’s dynamic world of business.