How to write an effective contract for your business

Almost every transaction in a business involves some form of contract, either implied or written. For example, every time you buy an item, the implied contract is that you are giving money in exchange for the item and its effectiveness. Other times, the contract may be written to mean that you are giving money in exchange for a service for a certain period of time.

Any time a contract is breached, the two parties are involved in a dispute and there may be litigation to dispute the meaning of certain terms and provisions of the contract. The purpose of this article is to illustrate how you, the business owner, can write an effective contract that seeks to avoid such ambiguities and ensure that you and the client come to a solid understanding of the terms and conditions.

#1: Be sure to account for all possible situations in the contract

Whenever the parties enter into a dispute over the terms of the contract, one party may claim ignorance or may argue that the situation was never written into a contract. For example, if you are selling SEO services and your client wants to switch plans between the length of their contract, it would be a good idea to include in the contract whether or not this is allowed. Another good example is if you are designing a website for your client and your client wants you to make substantial changes even after the website has been launched and finalized. Addressing this in the contract would help avoid a lot of disputes and pain in the long run.

Accounting for every possible situation requires you to sit down and really assess the different situations. This is a process that should take a long time. You have to think from a customer’s point of view, if he or she were to see the contract, what various loopholes and situations would they try to exploit? Chances are if the client has found a loophole in the contract she wrote, he will try to exploit it. Make sure you have taken this into account in the contract.

#2: Write the contract in clear and concise terms that the client can understand

As with anything you write, you need to make sure that you write for your audience. In this case, your audience is your customers. Be sure to use clear and simple language that the client understands, using simple words where possible and making sure to define certain terms in the contract if they need to be defined. Also, be sure to use as few words as possible, as long provisions can lead to ambiguity issues and the client may be inclined to skip them.