small business owner looking at a contract

What Are The Best Practices Of Contract Drafting For Small Businesses?

Creating compelling and legally binding contracts is crucial for the success and protection of small businesses. Small business owners in Pennsylvania can establish strong, clear, enforceable agreements that protect all parties involved by following certain steps and ensuring proper legal review.

Best Ways To Approach Contract Drafting For Small Businesses

1) Identify the Contract Type: Determine the type of contract needed based on the involved business activities. Common types include service agreements, sales contracts, lease agreements, partnership agreements, and non-disclosure agreements. Each type serves different purposes and will have unique clauses.

2) Define Clear Terms and Conditions: Define the parties using legal names and contact information. Then, detail the specific terms and conditions of the agreement, which should include the following:

  • Services or products provided: Describe in detail what goods or services you are offering;
  • Payment terms: Specify the amount, due dates, and acceptable payment methods;
  • Duration: State the contract’s start date and end date, along with any provisions for renewal;
  • Delivery terms: For goods, include delivery times and methods; for services, specify when and how they will be rendered.

3) Include Standard Clauses: Standard clauses provide additional protection and clarity. These might include:

  • Confidentiality: If applicable, include a clause to protect proprietary information.
  • Dispute resolution: Outline how disputes related to the contract will be resolved (for example, will mediation or arbitration be the preferred method?).
  • Termination Conditions: How can either party terminate the contract?
  • Force Majeure: Include a clause that frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, or an event described by the legal term act of God (flood, earthquake, volcanic eruption), prevents one or both parties from fulfilling their obligations under the contract.
  •  Compliance with Laws: Ensure the contract states that all business activities comply with applicable laws and regulations, including state-specific requirements in Pennsylvania.
  • Entire Agreement: A clause should state that the written contract represents the entire agreement between the parties and supersedes all previous communications.

4) Ensure Legal Compliance: Ensure the contract complies with Pennsylvania laws and regulations. Consider including specific clauses required for certain agreements or adherence to state laws regarding business transactions. Consulting with an attorney who understands Pennsylvania law is crucial.

5) Review and Revise: Before finalizing the contract, thoroughly review and revise it to ensure clarity and completeness. Avoid ambiguous language that could lead to misunderstandings or legal disputes. Having another party review the contract with fresh eyes might be beneficial.

6) Signature and Witnesses: Ensure that all parties sign the contract. Depending on the nature of the contract, you may also need witnesses or a notary public to validate the signatures. In Pennsylvania, note that specific contracts may require notarization to be legally binding.

7)  Keep Records: Once the contract is signed, all parties should receive a copy for their records. Keep the document in a safe and accessible place for future reference.

8) Ongoing Review: Review and update contracts regularly as necessary to reflect any changes in business operations, laws, or the relationship between the parties involved.

Contact a Pittsburgh Business Contract Attorney

Given the abundance of legal requirements and the necessity of ensuring compliance with state-specific laws, small business owners should consult with an attorney experienced in Pennsylvania business law. Jones Gregg Creehan & Gerace can provide personalized advice, ensure the contract is legally sound, and help navigate any complex legal issues that may arise with your business’s contracts. Contact us today.