No businesses can survive by itself. Getting into contracts with other businesses including your enemies is something you cannot run away from. But how you enter into an agreement is equally important for the survival of your business. Due to nature of the businesses, you need to be very smart when signing a contract no matter how insignificant it appears to be. You need to have proper documentation to give your business a solid legal protection.
Business to business contract can be very tricky and tempting. You never knew the intentions of the person you are entering into a business arrangement with. Be aware of the agreement that should feature in that contract to avoid future misunderstanding. You should also find out why these agreements are necessary. If necessary, you need an attorney who has experience in handling business to business contract matters to help you out. Here are the main 5 agreements that must be included in business to business contract:
1. Non-Disclosure Agreement
The non-disclosure agreement is all about confidentiality between the parties. If you are entering into a contract, some bits of your company’s crucial information might be exposed to the second party. This can be anything from mobile app code, marketing plan or business plan. If this information is leaked, it can be used by your business rivals to bring you down. The importance of this agreement is to ensure that your business secrets are not exposed.
2. Terms and conditions agreement
The right and obligations of each party are defined in this agreement/clause. Whenever you are signing or drafting a business contract, it important to know clearly what your obligations are. If you are a supplier, it should be defined what you are supplying. If you are the one receiving the supplies, then it will be important to know your obligations in terms of the payment.
3. Consideration agreement
The consideration is a crucial part of a business contract. The agreement spells out what the parties are gaining from that business arrangement. If the contract is supplying vegetable to a grocery, then the consideration received by the owner of the grocery is continuous supply of vegetable. The supplier’s consideration is the payment received for the supply.
4. Payment agreement
This is crucial part of any business agreement. Whether the contract is about the supply of services or goods, terms of payment must be clear. Note that this clause has been the source of many disputes among parties in contracts. This agreement must contain a clause on how much you are paying a unit item supplied. Terms of how and when payment should be made must also be clear. Will you be paying in advance or after the supply has been received? This question must be answered in this agreement.
5. Legal purpose agreement
For any business to business contract to be valid, it must be for a legal purpose. What if you are supplied with stolen merchandise? How can you get yourself out of such a mess? With this agreement, your business will not be legally liable. The agreement protects your business from being sued together with the second party for stolen merchandise.
These are the main 5 agreement that any business to business contract must contain. The agreements are drafted and designed to provide a good environment for doing business. If either of the parties breaks any of the agreements, the aggrieved party has all the rights to terminate the contract. You need to hire a lawyer who has experience handling B2B contract matters to be on the safe side.