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The dos and don'ts of contracts

Contracts are an essential element of any successful business. From initial startup to everyday operations to growth and development, they can clarify partnerships and business arrangements, and protect your business interests.

When drafting contracts and negotiating terms, it is vital to keep certain tips in mind regarding what to do or what not to do. This can help you avoid potential errors - and future disputes.

The following list of contract dos and don'ts provides a good place to start:

Contract dos

  • Do use plain language and avoid too much legalese.
  • Do include the date in the beginning of your contract to make it easy to refer back in the future.
  • Do ensure the contract documents all agreements and all possible contingencies. Leave nothing vague or to chance.
  • Do discuss any questions or concerns you have related to the contract with your attorney. It is better to confirm everything now than regret it later.
  • Do have your attorney review and advise on the contract before you sign it.
  • Do sign the contract in a colored ink, other than black, so the original copy is easily distinguishable.
  • Do have all parties initial every page of the contract and do include notarization, if required by law.
  • Do retain a copy for your records.

Contract don'ts

  • Don't use form contracts. Instead adapt documents to suit your unique circumstances and goals.
  • Don't use overly-long sentences. Instead break thoughts down into easily-digestible sections.
  • Don't assume all parties define terms in the same way. If there is any doubt, include the definitions in the contract.
  • Don't accept oral explanations or agree to modifications without getting them in writing.
  • Don't act in accordance with the terms of the contract until it is finalized by all parties.

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