If you own or manage a business and have a significant relationship with an individual or another business you should consider documenting that relationship through a contract. As trustworthy as you are and as positive a relationship you may have, protect your company's legal rights and interests with a written, properly executed contract not just a hand shake.
The problem is business relationships don't last forever and often they don't end on the best of terms. You may be accused of not paying them enough or that you breached their trust in some manner. With a written contract the rights and obligations for both parties are in black and white. It's not a "he said she said" situation. If there is a break down in the relationship the other party may sue you because of a broken oral (by words) contract and there could be a dispute over who said what to whom, who should've done what, who owes what to whom. That may be avoided with a written contract.
Think about the people and businesses your company relies on. They could be key employees, contractors, suppliers or distributors. Are there currently any contracts between your business and these individuals and companies? If not and the relationship sours, how would that impact your operations or profitability?
For key employees you may want a contract to remind them that any intellectual property or trade secrets owned by your company is not to be shared while they're employed and not to be used by them after they leave. You may not want them working for a competitor or soliciting your employees to hire them away or contacting your customers for his or her new employer for a period of time after they leave.
For a contractor or supplier spelling out in writing what's expected of them and your company may avoid future misunderstandings. You could state the services or products they're to provide, what you're willing to pay now and set up a mechanism or time frame for you to be notified of future price increases. This way if you have some warning of a price increase you may be able to shop around and find a replacement before your costs go up. Contractors and suppliers may also have access to trade secrets or confidential information that you want to ensure remains under your control now and after the relationship ends.
As part of these contracts you may want to consider a binding arbitration clause. This way if a dispute can't be resolved it won't end up in time and resource consuming litigation in court, where allegations and possibly embarrassing revelations could be made public. It instead would go to a private, much faster, probably less expensive alternate dispute resolution process known as arbitration. In an arbitration a single arbitrator or panel of arbitrators sit as judge and jury to decide the issue.
If you own or manage a business and want to learn more about how written contracts can help protect your company, or are currently involved in a contract dispute and want help, contact our office so we can talk about your business and how contracts may help your business now and in the future.