Why Are Business Agreements Important?

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Steve Smith
Apr 06, 2020   •  0 views

Verbal agreements open up a chance of manipulation of the terms agreed upon by the parties. When a company is doing well, parties can try to reap unearned benefits, and when the business is doing poorly, they may try to shift the liability. Written contract-based business for any of your partnership agreements can help all the parties be clear on the expectations from the partnership.

Preparing written commitments is purely a voluntary option. If the transacting participants have a good relationship, writing up contracts may sour that relationship. However, the more the risk, the higher is the need for a written agreement to assure.

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Well-written business agreements highlight the number of additional factors that you need to consider when preparing engagements. A written agreement need not sour your relationships with your stakeholders. It can help in building transparency on the nature of business transactions.

When Do You Need Business Contracts?

An easy answer to that is the moment you accepted on the terms. Handshake deals, while useful in good-faith relationships, can be prone to the errors of the human mind. An unwritten agreement could result in non-performance of contractual obligations. If a trusted in-good-faith party reneges on the verbal agreement, you will have to indulge in extensive negotiation and litigation

Contents of the Business Agreements:

  1. Names of the parties involved

  2. Validity of the agreement

  3. Goals and objectives

  4. Roles and responsibilities of the people involved

  5. Exit clause

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