How Can A Standard Business Contract Be Helpful in Running Your Business?

One of the most common matters that a business attorney addresses with his or her client is the preparation of a standard business contract that the client (usually a small business owner) can use in providing its products and/or services to customers or clients.  This is an important aspect of managing the legal risks of any business, particularly smaller businesses, because a standard business contract can address in clear and concise ways the matters that are most often problematic for the small business.  Whether you are a consultant, sell products, or provide specialized services to customers, a standard business contract will be beneficial in clarifying the terms and conditions of your transactions with your customers in a number of important ways.

The preparation and use of a standard business contract can be extremely useful because it then becomes a kind of checklist of both economic and legal items that are most important to address and agree upon between the business and its customers or clients.
That is, the use of the standard business contract requires the small business person to make explicit with its customers or clients exactly what it is legally obligated to do and how the parties’ rights and responsibilities should be structured; it does not leave open to confusion and disagreement what the small business is obligated to do.  The standard business contract should be periodically reviewed and revised by the small business’ attorney to ensure that it complies with, and affords the most protection permitted under, current law.

Among the most important topics addressed, and which should be customized for each business, are the following:

1. A detailed description of exactly what product or service is to be provided.  In the event of some sort of claim of non-performance, the standard business contract makes it clear what exactly the small business was to provide.
2. A clear indication of the price to be paid, the schedule of payment and a description of any late fees and/or interest that apply to a late payment.  Money and its consistent and predictable flow are key to the small business and this should be made clear in the contract.
3. Limitations of warranty, liability and indemnification to limit the exposure of the small business if there is a problem with its product or service.  These kinds of clauses make it clear to the customer or client exactly what the business will do if there is an issue, how a problem in performance will be addressed, what the customer or client can expect in those circumstances and ultimately the precise limit of how much for which the small business will be responsible if problems cannot be resolved.  These kinds of clauses are important both to let the client or customer know how problems will be solved and to ultimately limit the liability of the business so that a single problem will not end the enterprise.
4. Dispute resolution provisions that minimize the cost of resolving a dispute if one arises.  Generally, small businesses benefit from arbitration clauses that take disputes outside of the  standard, publicly-funded litigation system into private arbitration.  Arbitration has the benefits of keeping the matter confidential (i.e. out of the public record), is generally cheaper and quicker, and has simplified procedures that make it far less daunting than litigation with its technical and overly complex procedures.In summary, there are a number of reasons, both economic and legal, for a business to consider having its attorney prepare a standard business contract for regular use with its customers and clients.If you own a small business or a mid-sized business in the San Francisco Bay Area and you are in need of a standard business contract, contact Jeffrey Miller to find out how he can help you.  (650) 321-0410 or [email protected].