Small Business Tip of the Week: Create effective contracts


While smaller companies often conduct business based on informal handshake agreements or unspoken understandings, the more that is at stake, the more essential it is to have a signed contract. A contract serves as a guide and a memorial of the agreement that must be followed by both parties. It presents each party with the opportunity to:
• Describe all obligations they are expected to fulfill
• Describe all obligations they expect the other party or parties to fulfill
• Limit any liabilities
• Set parameters, such as a time frame, in which the terms of the contract will be met
• Set terms of a sale, lease, or rental
• Establish payment terms
• Clearly establish all of the risks and responsibilities of the parties

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