Terms of the Contract

The terms of a contract are the statements that describe the rights and obligations of each party to the agreement. Terms are all the matters agreed between the parties about what is to be done, how it will be done and under what circumstances.

Exactly what those terms are must be determined by the parties to the agreement. Terms are the elements of the contract. They are binding and carry legal consequences if they are broken.

During negotiations it is advisable to keep detailed records of any promises you or the other party makes. These records will form the basis for instructing the lawyer who will draft the contract.

Standard contract terms

If your business involves forming similar contracts with various clients, you may find it useful to have a standard contract where you can fill in the appropriate details.

For example, a quote could contain the details for a particular client and your standard terms and conditions on the back. Allowing room for a signature indicating acceptance would ensure that your agreement is in writing.

Read everything before you sign it

Unless there is fraud or misrepresentation, generally, if you sign a written contract you are bound by all of its terms even if you did not read or understand them.

It is extremely important that you read and understand all the terms of a contract before you enter into it.

Make sure that any written agreement you sign reflects the spoken agreement.

You should not sign any document until you are fully aware of what its terms and conditions are and what they mean for your business.

Keep a copy of all documents you sign

Ideally, request that two originals of the contract be prepared and signed by each party. Each party then keeps one signed original. If two originals are not available, obtain a copy for your records. The other party isn't obliged to provide a copy of the signed contract in the future if a dispute arises. Also obtain a receipt for any money paid.

Back to top

What's next...

Back to top

 

Related Information

Workshops

Our free Business Basics workshop will guide you through all the steps involved with establishing and running your own business.
Contact the Small Business Development Corporation Contact your local Small Business Centre
© 2014 Small Business Development Corporation (All Rights Reserved) Home | Privacy | Disclaimer | Copyright