Facts about the Business Contract Sale of Goods template

What is a Business Contract?

Building relationships is an important part of doing business. Proactive business owners use business contracts to establish these relationships and determine the ground rules. In its simplest form, a business contract refers to an agreement between two parties for commercial purposes. These agreements become legally enforceable should one party fail to fulfill his or her obligations.

In the best-case scenario, business contracts refer to physical documents that establish all the relevant ground rules. However, even verbal agreements and casual emails may amount to business contracts. In some cases, when parties do not explicitly lay out the agreement, implicit business contracts exist.

Courts rely on three specific elements to determine the legitimacy of a business contract:

  • Competency: As is the case with any other type of contract, the individuals involved must be legally competent. For the most part, this refers to all adults of sound mind.
  • Subject: Business contracts need to establish the scope of the work and the responsibilities of each party in reference to the subject matter. This may include details such as date, deliverables and price.
  • Consideration: The contract must establish a commercial motive for its creation. More often than not, money is the consideration.

What is a Business Contract used for?

Almost every business transaction may involve contracts of some kind. From suppliers to manufacturing to distribution, companies use business contracts to protect themselves from liability at various steps of operations. The three types of business contracts best illustrate the main uses:

  • Sales-related agreements: These can govern relationships with suppliers, retailers and brand partners.
  • Employment contracts: Employees and independent contractors typically sign contracts to establish their work relationships with the business.
  • General business contracts: General contracts can cover any other type of purchase, such as confidentiality clauses or agreements related to intellectual property.

Why should you use a Business Contract?

As a business owner, you may feel tempted to proceed without a contract. This is especially likely when you know the people you conduct business with or you want to move quickly. Here are some good reasons to reconsider.

  • Negotiation: In the absence of a business contract, either party may feel tempted to proceed and figure out the rest along the way. Getting a written contract first compels both parties to negotiate honestly and fairly at the start and to do so in a timely manner.
  • Documentation: Sometimes, business disputes arise from misunderstandings or when people simply forget the original agreement. Business contracts provide written documentation that all parties can refer to.
  • Security: Should either party violate the original agreement, it is much easier to seek reparations via a written business contract than through word of mouth. Written contracts also hold up better against change of ownership or managers within a business.

How to write a Business Contract

If you create a business contract without a contract template, you need extensive knowledge of business law. Without this, it would be difficult for you to ensure your document meets the necessary criteria for it to be an enforceable contract. You also need a legal background to better predict common business litigation problems and protect against them in your contract. If you do not have these skills, then you may consider hiring an attorney. A legal professional can do an excellent job of drafting a document, but it may cost you more than the contract itself is worth.

Because of this, many people turn to business contract templates instead. These documents provide a workable foundation for you to build on and create a customized contract for your needs. They also cost a lot less than hiring an attorney. You may later hire an attorney to review the document or legal advice for much less than you would hire one to draft it.

Here is some of the information you may need to include in your business contract:

  • Name of your business
  • Name of each individual party
  • Date the parties entered into the contract
  • Location of the court that has jurisdiction, if any
  • Scope of the goods or services provided
  • Delivery time of the goods or services provided
  • Cost of the goods or services provided
  • Payment date for the cost of goods or services provided
  • Signatures of each party
  • Expiration date or termination clauses

How to Fill Out an Employment Contract with PDFSimpli in Five Steps

When creating your business contract, you may feel pressured to ensure you forget nothing. After all, the simplest mistake could cost your business. Follow these simple steps to reduce the risk of creating errors.

  • 1. Preparation:

    How you prep for a business contract depends on the type of contract. For instance, for an employee contract, you may need to work closely with the human resources team to determine what to include and how much room you have for negotiation. In contrast, for a sales-related contract, you may need to negotiate with your suppliers on price and delivery schedules.

  • 2. Choosing the Right Software:

    Once you have all the details at the ready, you need software that makes it easy for you to insert these into the business contract template. While creating the business contract, you may find that you or the other party have a contract dispute, which can bring everyone back to the drawing board. With this possibility in mind, choose software that allows you to save, revisit and edit a document. Such software can be expensive, but PDFSimpli is reasonably priced and offers a free trial period.

  • 3. Edit the Contract:

    Filling in the information may take some time. Ideally, you have other written documents to compare the final piece to. This reduces the likelihood of you needing to revise the document several times.

  • 4. Review the Business Contract:

    Reviewing the document further ensures its accuracy. Read over the document first to check for errors. Ask the other party to review the document to ensure it reflects the original agreement before asking them to sign. Having a second pair of eyes can prove useful and reduce your burden of responsibility.

  • 5. Download and Print:

    After your lawyer or another business person confirms the contract is correct, save electronic and physical copies. All parties involved in the business dealings should sign and keep copies. Sometimes, one person keeps the original and others get scanned copies. Other times, each party signs original documents so that everyone has an original copy for his or her records.

Business Contract Frequently Asked Questions

While not all business transactions require formal contracts, these usually do:

  • The total cost of goods or services sold is $500 or more
  • Delivery of goods or services may take a year or more
  • The transaction involves the sale, lease or renting of real property
  • The transaction involves the use of intellectual property

You cannot force someone to agree to a contract, but you can make signing a contract a condition of doing business with you or your business. For instance, many companies make signing an NDA a condition of employment. If parties cannot negotiate the terms of the contract presented, however, you may face ethics-related backlash.

Each company must determine who is authorized to sign documents on its behalf. Generally, owners, managers and top executives have this right. Verify with the company that the person signing documents has the right to do so. Individuals who sign do so in their own name. In some cases, such as when working with creative people, someone may legally sign under a pseudonym.