Depending on the type of business you own, there may come a time when you need to sign a contract with another entity for a project. This can be intimidating for those who are not familiar with the legalese and the type of language used. It’s also scary to think that you might miss something important that will leave you in a bad position.
If you are party to a contract, you need to make sure that you have gone over every detail. Even missing something small can cause a big problem. For instance, what if you fill out the wrong date on a lease form? You could have movers all ready to go with nowhere to put your property. This can cause a huge headache, plus you will have to pay for moving services to return on another day. This is just a small example, missing your responsibilities can lead to major issues. Here are some contract responsibilities that you cannot overlook.
Fulfilling the Major Terms of the Agreement
Of course, this isn’t a small responsibility. It’s the crux of a contract itself. If you are contracted to provide a product or service on certain dates and at certain times, then you’d better deliver. Or, if you have said that you will finish a project by a certain date or pay penalties, then you are at risk if you don’t complete it on time. If you don’t fulfill the main purpose of your contract, then you could face legal problems, your reputation will be damaged, and you will have to pay whatever penalties are included in the contract.
Meeting Payment Terms
A contract for services should include payment terms. This means what the amount of the payments are, when they are due, and how they are to be made. For example, you can direct deposit, send a cheque, or use a company credit card. However, the method should be agreed to by both parties. There should also be a clause for penalties for late payments. This protects both parties and keeps them on the same page.
If it is a regular payment of a specific amount on a scheduled basis, that should be all laid out in the contract. You must completely understand what dates you will owe or expect payment so that none are missed. There may also be payments that come from one account and others that come from another account. Make sure that it is clear in the contract what account pays for what items, and ensure that you pay from the right account or take payment from the right account, whichever applies.
Let’s say you sign a big contract to work jointly on a project with another contractor. You’ve got all the equipment and workers in place, and you are ready to go. However, when it’s time to break ground, you have forgotten to get additional general liability insurance tailored to contractors’ needs for the project. As a result, your partner will not want to move forward since they could be at additional risk. Even if you promise to cover anything that happens, they will still not move forward because a promise is not a contract. If you have to provide proof of insurance or additional insurance because of a contract, then you need to make sure that you have it in place before you need it.
Make Sure Everything is Clear
One of your responsibilities is to make sure that everything in a contract is clear to all parties. Any language you use should be specific and unambiguous. There should be nothing that can be left to interpretation. Remember, it’s not just about the words you use, it’s also about how you structure sentences. What seems like it might be clear to you might not be clear to others. If you need to add detail and wording to make everything precise, then do not hesitate to do so. There are no extra points for brevity and succinctness. But, of course, if you can explain it well in a brief way, then do so by all means.
You are responsible for reading and reviewing every word of your contract before signing it. If you sign it without doing so, you can’t go back and say that you didn’t realize what you were signing. Check every detail, and ask for clarity or explanations if need be. It’s always a good idea to get a legal professional to look over contracts to ensure that everything follows the law. Make sure that there are no blank spaces, such as dates or monetary amounts. Much like with your language, you need to ensure that there is nothing in there that you do not understand or that is ambiguous in any way.
There are contracts for any number of situations in which your business might find itself. Along with fulfilling the main items in the contract, clauses often require you to provide regular reports about certain aspects of a project. For instance, if you have gotten funding from the government, you will have to give them a detailed report of how you have spent the money or plan to spend it. You may also be required to provide reports to clients with updates on your progress for a project and outline your continuing plans moving forward. In some cases, not reporting on time or ultimately could have penalties or make it difficult to work with that client or government entity again.
The signing of a contract doesn’t have to be the end of things. You should regularly review any contracts you have to see what works and what doesn’t. That way, if it comes time to renew a contract, you will have notes on what you want to change or update. Not only that, but when you are negotiating a new contract in the future, you will have easy access to items that you know work and don’t work for you. Regular review will make your future contracts more effective for you.
Signing a contract means that you are legally bound to another entity. You should not take that lightly. Failure to fulfill your responsibilities could lead to financial penalties, and it’s also unethical. So make sure that you do everything you need to do with regard to any contracts you sign, and your business will thrive as a result.