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Most important things businesses should include in contracts

Whether it is a vendor agreement, employee contract or operational bylaws, owners must write organizational contracts in a clear, concise manner. Unfortunately, business owners often lose sight of numerous factors that can hinder the enforcement of the contract and hurt the organization going forward.

While every business faces unique challenges and specific goals, there are certain provisions that owners must address when drafting a contract, including:

  • Terms centering on payment: While it can be a difficult conversation for a new or tenuous relationship, the business owner must include language in the contract regarding payment. Further, the contract should include provisions regarding late payment, incomplete payment and the consequences for these actions.
  • Restrictive covenants: The business must protect itself when crafting legal documents. This can often mean including nondisclosure agreements, non-compete clauses or non-solicitation clauses. Business owners must draft these restrictive covenants using clear, concise language that not only specifies the protected information but also the consequences for breaking the agreement.
  • Limitation of liability: Many business owners are careful to shield themselves from legal liability in organizational contracts. It is wise to include language in the contract that specifies what liability the parties face. While not every scenario needs to be mentioned, mapping liability out early can help if there are disputes later.
  • Contract or agreement termination: While the concept of contract termination is not new, many business owners wish they had included language in the contract itself that clearly states grounds for termination and financial consequences. These clauses can help dictate what specific situations that can lead to the contract’s termination such as missed deadlines and the return of any deposits.

No matter the age, size or scope of the organization, a business relies on strong contracts to protect itself, protect its future and protect its interests. When fighting to prevent breaches of contract, business owners must remember several tips regarding what types of provisions to include and the types of language to use.