4 Things to know while creating a contract

creating a contract

In the growing world of business in Australia, contracts are typed out and signed every second. Getting into a partnership with other people or other companies can really boost the financial and economic value of your company. But what we must not forget is the importance of the contract itself.

While some contracts result in healthy and fulfilling business relationships, other contracts result in a grave loss of money. Therefore, it is of absolute importance that you consider what goes into the contract and who you are signing a contract with. 

Read on to find out the four essential things to remember while constructing a contract.

1. What should you put into a contract?

Since a contract is a proof of everything that you and the other party have agreed on, you must write everything into the contract. Clearly mention all terms and conditions, rules and regulations, responsibilities, etc.

Do not leave out any details assuming that they will adhere to it to anyway or out of goodwill for the person. Your personal relationship must not reflect in the professional document, the contract itself.

2. You must do your research

Make sure you recognise the entity that you are agreeing with.

Many times, people agree with people who either do not exist or are con artists. If you sign a contract with someone, it will mean nothing if the person or company is bankrupt. Therefore, make sure the other party is trustworthy.

To achieve this, the Australian government came out with the Australian Securities and Investment Commission (ASIC). This organisation registers all corporations, companies, and also their business names, that is whether an individual head them, by a company or by any other entity.

You can visit the website of ASIC anyway to see if the business or entity is listed in it or not. You can also check the names of companies or people who are barred from running a business.

You can also contact ASIC or ASIC approved organisation to dig up information about the person or people you are about to enter a contract with.

3. Check the authority of the second party

Sometimes, con artists can trick people into getting into contracts with them for the sale of goods and services that they have no authority over. Therefore, it is very important for you to first determine if the second party has actual authority over the said service or goods.

For example, if you are signing a contract for the sale of a house, it is good practice to ask for legitimate legal documents from the owners of the house to prove that are in reality the actual owners of the house, and therefore, have the authority to sell the house to you. If you believe in the general goodwill of people and do not want to impose the unnecessary requirement of documents on them, it may cost you a good deal of money.

4. Get legal help

To check the legitimacy of the documents presented to you, and to help with negotiating the terms and conditions of a contract, a business attorney is a must. Consider the contract closely and see if the terms are workable for you or not. If they are, well and good, but if they aren’t, it is time to do some bargaining. And having a lawyer present during your negotiating sessions can really boost your chances of changing the contract in your favour.

Lawyers can also give you great insight into future shortcomings or mishaps in terms of the terms and conditions of the contract.

Getting into a contract can really increase your chances of becoming successful and reaping benefits, but you must do it carefully!

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