Forming a business involves several important decisions, one of which is drafting a well-written contract. Many business owners know that a well-thought-out agreement is often the first line of defense against potential disputes.
As you launch or grow your own business, it is essential to implement key contract clauses that promote a smoother relationship with customers, partners or vendors.
Key contract clauses to avoid business disputes
Here are standard contract clauses that can help safeguard your business interests:
- Scope of work/services: Clearly define your goods or services. Include specific details, such as deadlines, payment schedules and performance standards.
- Payment terms: When and how do you expect payment? Be specific on payment amounts, methods and due dates. You can include clauses addressing overdue payments, such as interest charges or penalties.
- Confidentiality: Use a confidentiality clause to share sensitive business information. It prevents parties from disclosing proprietary information obtained during the business relationship.
- Dispute resolution: How would you resolve disagreements? You can include steps like mediation, arbitration or going to court. This provides a clear path to resolve issues without escalating.
- Termination clause: This clause outlines when and how either party can end the agreement. It should specify grounds for termination, like failure to meet deadlines or a breach of contract.
- Governing law: This clause specifies which state’s laws will govern the contract. If your business is in New Jersey, selecting New Jersey law can simplify issues if a dispute arises.
Including these clauses in your contracts can significantly reduce the likelihood of disputes. They provide clear guidelines and expectations for all parties involved.
Obtain legal help when confronted with uncertainty
The most effective way to avoid legal issues is to consult with an experienced attorney familiar with New Jersey business and commercial laws. They can guide you on structuring your business, drafting contracts and complying with state regulations. This way, you can focus on bringing your innovative ideas to life and building a successful business.