Writing Effective Business Contracts

 As small business owner, you will have to write several contracts over the course of your career. Depending on the nature of your business, you may have contractors that do freelance work for the company or work to support the company, such as renovation. Even regular full and part time employees may need to have a contract. Keep in mind these things when writing or re-writing different types of contracts.

Create a contract for any type of business agreement. Use simple language that is professional, but easy for anyone to understand. If the language is too full of jargon, people likely won’t read the contract completely which can cause problems down the road. Always specify payment agreements, whether its salary you are paying to an employee or a set fee on a per-project basis. If you hire on a temp-to-hire basis, make the terms clear that the position may or may not become permanent and when it will end if it is temporary. Explain how you will distribute funds (weekly, monthly, etc). Always include your contact information so there is no excuse for someone not to contact you with questions or problems. You should state all the services you expect to be provided and in the case of construction or installation services, who is responsible repairing any damages that may occur. Remember that state laws vary and be sure to research any that apply to your company. Include a mediation clause in case of a dispute, define acceptable termination terms, and remember that an oral contract can be binding as well. Finally, in all contracts, detail is very important. State explicit examples and specific conditions as often as you can.

You may be wondering if an employee handbook is a contract. Well, yes and no. As a whole, it is not considered a legal contract; however, there may be parts of the handbook that contain legal issues that are outlined in a manner that constitutes a contract. If you don’t have one, there are reasons that it’s a good idea to implement one. You can cover all your policies on attendance, dress code, vacations and leaves. It can serve as a legal defense for the employer in situations where an employee feels they have been wrongly terminated. You can address what corrective actions you will take, how an employee should handle a complaint, terms for offering raises, and safety policies as they apply. In some cases, such as businesses with ten or fewer employees, an offer letter and confidentiality agreement may suffice.

Writing contracts is not to be taken lightly. They can make the difference between liability and exemption. Take care to write them correctly. Make it happen!

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