5 Key Reasons Why Contracts Are Important In Your Business

Do you find yourself asking why contracts are important in your business? Let’s explore the reasons.

In an ideal world where people are true to their worlds, drawing up a contract is unnecessary. Once you’ve come to an agreement, you shake hands and proceed to fulfill your obligations. But that’s not how it works in the real world. The harsh reality is that business transactions can quickly go south for myriad reasons. Despite your best efforts, people can simply change their minds. Unforeseen circumstances may arise. These things happen.

Contracts play such an integral role in successful business relationships. No matter the scale and size of your business transactions, it’s always ideal to have everything written down.

 

Table of Contents

• Why Contracts Are Important In Your Business?
• How to Write a Good Contract?
• How to Manage Contracts?
• In Conclusion

 

Why Contracts Are Important In Your Business?

Often, contracts receive very little attention. Many people think that just because they’ve spent countless hours negotiating deals, it’s no longer necessary to have the terms written down, and that could not be further from the truth. Here are a few good reasons why contracts are essential in your business:

1. Contracts protect your business.

Deals can fall through for many reasons. Without a contract, enforcing the terms you both agreed on will be an uphill battle. It’s your word against theirs. A duly signed, legally binding document that enumerates all the obligations and compensation makes it easier to settle any disputes.

2. Contracts offer clarity.

Another good reason why contracts are important in your business is that they clearly lay out the terms of the deal or agreement, leaving little room for misunderstanding and misinterpretations. You and your client or partner have concrete documentation to refer to if there are certain obligations you’d like to clarify or settle.

3. Contracts are legally binding.

It’s hard to settle a dispute in a court of law if there aren’t any signed documents to prove both parties have agreed to the terms. When you have an enforceable agreement, you can take legal action if you find the other party breaching the contract.

4. Contracts build excellent professional relationships.

From the first stage of contract management down to the last,  it’s a collaborative process that requires all concerned parties to communicate and exchange ideas. The process helps you build a strong foundation for a solid business relationship. Moreover, contracts indicate that you are entering the agreement in good faith.

5. Contracts increase profitability and savings.

We finally get to the last reason why contracts are important. When you have a well-written contract with fair and reasonable terms saves your organization money and increases profitability. Contracts also stipulate compensation and the payment process. You don’t have to worry about being short-changed.

How to Write a Good Contract?

Now that you know why contracts are essential in your business, let us discuss some tips and tricks to help you write a solid contract to maximize its benefits.

Writing contracts can often appear intimidating because many believe you need to be well-versed in legal terms and jargon. On the contrary, a good contract does need to be written in an elaborate and superfluous language. The simpler, the better. In this light, it’s much better to write the terms in the easiest, most understandable way possible to avoid misunderstandings. If any terms seem vague or ambiguous, it’s best to define them clearly.

When writing contracts, it is vital to describe everything in great detail, especially the terms and conditions of the agreement. Do not leave any details out, no matter how small or irrelevant they may seem. You need to include the goods or services to be provided or rendered, the names of the parties involved, the compensation and payment terms, and the contract duration.

You also need to stipulate how you should handle disputes should they arise. Both parties should agree on whether to resolve the dispute through mediation or arbitration. The former is ideal as it’s less costly.

Aside from finding out why contracts are important in your business, it is equally vital to learn the elements of a contract. All the essential elements should be found in your agreement to make it ironclad.

How to Manage Contracts?

Many businesses owe their success to an efficient contract management system. Contracts are, after all, the backbone of any business. This is the reason why contracts are important. You do not only need to pay attention to writing them but also to the other steps in the contract lifecycle that follows. Admittedly, managing contracts can be a bit of an overwhelming task. Luckily, there’s one sure-fire way to help lighten this load.

Fill is the ultimate tool to have in your arsenal if you want to improve your contract management system. Fill allows you to safely and securely sign contracts remotely. It’s compatible with multiple devices, including iOS and Android phones and tablets and macOS and Windows computers. Fill is entirely cloud-based, which means you can easily access your contracts and documents no matter where you are.

Fill also offers a suite of modern features and functionalities. Our real-time audit trail and log allow you to keep track of the progress of your contract lifecycle. You can also set a deadline to ensure that the signer completes the document promptly. If not, they will receive notifications to remind them it’s almost due.

Moreover, Fill works seamlessly with other tools and software for maximum efficiency and productivity. You can easily integrate Fill with your favorite business and contract management tools.

Best of all, Fill is 100% safe and secure. We only use the highest level security measures to safeguard your most confidential contracts and data. We also use military-grade encryption to ensure no unauthorized party can access your files.

You can enjoy all these and more for as low as $4.17 per user per month. For more information about Fill and its features, click here.

In Conclusion

There are endless reasons why contracts are important in your business. So do not make the mistake of taking them for granted. Always invest time writing them, or you can use pre-approved templates to speed up the writing process. Don’t hesitate to use tools and software to automate some tasks and minimize human errors. And finally, pay enough attention to the other stages of contract management.