Tips for Making Business Agreements and Contracts

In the business world, most agreements should be in writing even if the law doesn't require it. A written agreement is less risky than an oral agreement, because you have a document that clearly spells out each party's rights and obligations in case of confusion or disagreement.

The body of the agreement should spell out the rights and obligations of each party in detail. Don't leave anything out. In the world of contract law, judges may only interpret a contract from its "four corners," not from what the parties said to each other. If you forget to include something, you can always create a short written amendment.

Specify who pays whom, when the payments must be made, and the conditions for making payments. As you might guess, money is often a contentious issue, so this part should be very detailed. Consider including the method of payment as well.

If you and the other party are located in different states, you should choose only one of your state's laws to apply to the contract to avoid sticky legal wrangling later. In addition, you may want to specify where you will mediate, arbitrate, or bring legal actions under the contract.

When one business hires another to perform a service, the other business will become privy to sensitive business information. Your agreement should contain mutual promises that each party will keep strictly confidential any business information it learns of while performing the contract.