A contract agreement is a document signed by and between two (or sometimes more) parties to formalize agreements. Signing a contract makes an agreement legal and binding. This means that whatever stipulations written on the contract are legally enforceable. A contract also contains the formal agreements, the details of which can be outlined on the contract itself, or sometimes in attached addenda and annexes. Should any party breach the agreements on a written agreement, they can be liable for civil damages under the law.
Contract negotiations are often done between any two parties that need to agree to certain terms. Negotiations are done to make sure that the contract is fair and impartial, and that it does not grant either party too much bias. Some common items negotiated in a contract are financial matters, deliverables, timelines, and penalties.
You might find yourself negotiating a contract one time or another. This could be for a mortgage or loan with your bank, or a lease agreement with a landlord or tenant. You could be negotiating a contract for employment, or a business agreement with a supplier or contractor. When negotiating contract agreements, here are a few things to remember.
Are the terms of the contract fair and attainable? Contracts are meant as agreements by both parties to do some act. For a landlord, for instance, it’s to provide the tenant living or office space. For the tenant, it’s to pay the monthly rent, and to keep the premises clean and livable. For businesses, it’s either to commit to supply or buy a certain quantity of goods. When negotiating such a contract, the first thing you should consider is whether the terms are agreeable to your end, and whether the terms are fair.
When contracts are one-sided, it might be difficult for the aggrieved party to fulfill the terms. Therefore there is a higher likelihood of default or breach. Negotiate for terms that are favorable and fair to both yourself and the other party.
Are the terms clear? Sometimes, contracts might be riddled with legal loopholes. These can be easily exploited by any skilled lawyer, in the event that either party breaches the agreements. To avoid any confusion, make sure that the terms of the contract are stated clearly, unequivocally and unambiguously. This means the statements should be exact. Sometimes even the placement of punctuations like commas, periods and the like could change the meaning of a sentence from the intended.
What are the exit options? No agreement is perfect, as sometimes real world situations call for either party to call off the agreement. For instance, a lessee might want to terminate the lease before end of contract. Or a supplier might not be able to meet up with demands. A contract should stipulate the exit options, whether these are agreeable to both parties, or under penalty. For instance, a party can be penalized with an immediate cancellation of the contract if he is unable to meet certain conditions. However, these exit options should include a reasonable lead time, usually 30 days upon notice.
Contract agreements are important in that they build confidence between and among the parties that sign into the said agreement. Formalizing one’s intentions gives all parties the assurance that these agreements will be carried out faithfully. Therefore, parties who will enter into contracts should make sure that these are fair and doable, and that there is no unnecessary bias.