A written contract is the best way to protect a business relationship. It outlines the terms of the agreement in plain black and white so that there’s no confusion and no misunderstandings. A well-prepared contract can do a lot more than this. So why do we insist on engaging in business on less than a promise and a handshake?
Most certainly, such as a contract that ensures timeous payment by clients or protects if the client fails to pays altogether – having a direct impact on business cash flows. The contract secures an already negotiated position, so that the business owner can focus on profit-making activities.
The parties to the contract are bound by their promise (obligation) and duty as stated in the contract. The contract will stipulate what the consequences are of not doing or failing to deliver as promised.
Remember that every contract is different and utilising standard contracts are dangerous. A standard contract will expose your business to any of the above risks. No business is standard therefore a standard contract is not recommended. In addition, different contracts are required for different stages of the business-life-cycle : start-up, growth, maturity and decline stages.
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