How to Make Solid Business Contracts and Agreements

How to Make Solid Business Contracts and Agreements

When a person tells you that they ‘mean business,’ you know that they are serious about something, right? Doing business is never a trivial matter, and it includes several things in one transaction, like products, services, effort, money, relationship or partnership, honesty, and, most importantly, trust.

Trust is required to have a good and lasting relationship in business. This is one of the several reasons why contracts came into existence and are now popular in business. A business contract is a guarantee to the parties involved that their transaction is reliable and safe. Read on for four tips to make a solid business contract.

1. Get it in writing

There are several types of contracts between business parties in the world of business. An oral contract can be regarded as legally valid. However, a person may be as good as their word, but only a written contract is enforceable in court. A written contract clearly spells out the rights and obligations of each party, which is very helpful in case of a disagreement.

Drawing a business contract from scratch is time-consuming, especially if you have to do it every time you acquire a new client, win a request for a proposal, or start a new project. Luckily, there are several free online resources that you can use to create contract templates. In addition, contract templates make sure there is uniformity when it comes to legal terms.

2. Keep it simple

Stuffing a legal contract with legal jargon does not make it more legally binding than a contract written in simple English. Actually, a contract with simple and clear sentences and numbered paragraphs with subheadings make it easy to point out any contract breaches. Sometimes clients, vendors, and business partners can hide behind the gray areas of complex agreements, which is why it is important to keep everything straightforward.

3. Identify each party correctly

For a contract to be legally binding, you have to identify the parties by their correct legal names. This helps to make it clear on the person or company responsible for performing the obligations outlined in the contract. It also makes it clear on who you have legal rights against in case things don’t turn out as expected. If you want to enter into a contract with a business organized as a corporation or LLC, make sure you identify it by its correct legal names, but not the person you are negotiating with or the one signing the contract.

4. Specify payment obligations

When should the payments be made? Who is paying whom? What are the conditions for the payments to be made? Money is always a contentious issue, so this section should be detailed and clear. Specify if you will only pay when the work is complete or in installments.


A solid business contract should be in writing, simple, and clear. It provides clarity, becomes legally binding, and offers a sense of assurance. It acts as a proof of transaction, which reduces the risk of a breach.