Businesses often partner with fellow businesses to branch out to new consumer markets, build brand awareness, and increase sales. But before they could embark in a collaborative venture, they need to set some ground rules to ensure that both parties deliver as expected. This is usually made official by signing a general contract.
A business contract is defined as a legally binding agreement between two or more persons or entities. One thing that most people can agree on is how a simple contracts can be pretty complex.
Though most contracts are more than a few pages in length, for situations where you don’t have the time to sit down and discuss the exact terms of an agreement but still need to get some work done as soon as possible, or when you’d rather keep it simple with a one-page document, contract agreement letters are used in place of a regular contract.
A contract agreement letter is a special document that is drafted to a person or entity that will be completing a set of tasks for you. This is used to notify the recipient that he or she may begin working under certain terms. You may also see business agreement letter examples.
For instance, you might be hiring a contractor for a particular job, but you decide to write a contract letter to allow him to begin work before the exact terms of the agreement have been established. There are also times when the contract letter is used to represent the entire contract agreement between two entities. Because of this, it’s important to sit down and think through your intentions for the agreement before you start drafting it.
One common reason why agreement letters are required is for instances where people have orally agreed to work for someone, but would still want a written agreement to document their terms. Simple agreement letters may be used for a variety of purposes, depending on the author’s primary intention. They could be used for business partnerships, and permanent (for regular workers) or temporary (for contractual workers) employment. They could also vary in content and length, depending on what is offered or required from the recipient.
Contracts and agreements are terms that are often used interchangeably in the world of business. The key differences between the two are only minor, wherein the outline of a contract is more formal and rigidly presented as opposed to the terms outlined in an agreement. If you’re in the position to write a business agreement or contract, the following guidelines may come in handy:
While oral agreements are considered legal and binding in many cases, they can be quite difficult to enforce in court. That’s because if a breach in the said contract does occur, it’s nearly impossible to prove that an agreement has been made without sufficient evidence to support one’s claims. In a business setting, most general agreements must be written even if the law does not require it.
A written agreement is a lot less risky compared to an oral agreement, mostly because having a physical document that clearly spells out each party’s rights and obligations in case of a disagreement, or perhaps even a breach, puts you in the right.
Contrary to what many believe, you don’t have to use big, industry-specific words to make the contract enforceable. This isn’t necessary, nor is it recommended, as this can only complicate the situation and make it difficult for readers to grasp. You may also see marketing agreement templates and examples.
Instead, stick to a simple language. Focus on the readability of the document by constructing short, clear sentences with numbered paragraph headings. This is often done to alert the reader about what’s being emphasized in the paragraph. You may also like rental agreement letter examples.
It’s always best to communicate directly with the person in charge. Negotiating with a junior person, or someone who follows orders and is not authorized to make stern decisions, can be a time-consuming process. There’s no guarantee they’re delivering your message the way you want them to, so if you sense that something like this is happening, make a polite request that would direct you to their superior officer. You may also check out how to write an agreement letter.
You need to make sure the person you negotiate with has the power to bind the business and that this individual can ensure that the business will abide to its obligations under the agreement.
For assurance, you could either consult with one of the business owners, or with the company’s chief executive officer or chief operating officer.
It’s important to include the correct legal names of the parties involved to make their specified roles and responsibilities clear. This is used to verify the obligations that must be performed by each party, as well as who you have legal rights against in case something goes wrong. You might be interested in service agreement examples.
The body of the commercial agreement is the most critical part of the document. It should spell the rights and obligations of each party in full detail. Anything that was discussed verbally but was not included in the written contract may not be imposed the way you want it to. In contract law, contracts are strictly interpreted from its “four corners,” and not from what the parties said to each other.
But in case you forget to include something in the contract, you could either write a short amendment, or handwrite the changes to the unsigned contract.
Money is a complicated issue that many businesses value to a particular extent. This is why it’s essential to specify payment obligations in the contract.
Answers regarding who pays whom, when the payments must be made, and the payment conditions to adhere to must be indicated properly. You might want to consider specifying your payment methods as well, given how some people would rather receive a check or charge card, while others would prefer being paid in cash. You may also see what is a business agreement?
It’s not unusual for a business to pull out of a deal due to the poor performance exhibited by the opposite party, so it only makes sense to set out the circumstances under which the parties are allowed to terminate the contract. Say for example, if one party fails to meet numerous important deadlines, the other party should be given the right to terminate the contract without violating the basic agreement.
Rather than bringing your arguments to court, you can agree on other alternatives to handle your dispute. This can be done through arbitration or mediation. Your contract should discuss what you and the other party could do in case something goes wrong. You may also like promotion agreement examples.
It is possible for two parties under a shared contract to belong to different states. When this happens, the best you could do is to pick only one of the state’s laws to apply to the contract.
In addition to that, you should also specify where you will mediate, arbitrate, or bring legal actions under the contract in the event of a dispute.
Contracts and agreements generally carry classified information that should not be revealed to an unauthorized entity. Hence, non-disclosure confidentiality agreements are made. It’s vital for the agreement to dictate how the information should be handled and that any business information learned by each party while performing the contract must be kept strictly confidential.
The party held accountable for exposing private information to the commercial public may face consequences depending on what is stated in the contract.
Before you can close a deal and begin working on an assigned project, you must first ensure that a contract has been signed. A basic contract agreement letter usually contains significant information, such as your rights and responsibilities, which you are subjected to per the contract. It also informs the recipient of the policies and regulations included in the actual agreement.
Once the recipient has fully understood what is conveyed in the contract and agrees to it, the letter must be signed to officially implement the task or project.
But if you’re asked to craft a contract agreement letter but don’t know how to, you can refer to the tips below:
Like any other official letter format, you need to start with a heading. Place the date at the top-left side of the contract letter, and address it to the person or entity you are writing to (specifically with whom you are entering the agreement).
The first paragraph of your letter should indicate that you are hiring the recipient. It must also state the position that is being appointed to them, where their duties are to be completed, the amount to be paid, and the start date (and end date, for temporary workers) of the job. Since a contract letter usually acts as a preliminary to any formal agreement, the exact details of the job may not always be indicated. If so, you do have the option to leave them out of the letter.
The second part of the formal letter should include any special notations that the recipient must know about. This includes the number of work hours the employee is expected to render per day, the lengths of each break, the benefits to be given, and any other stipulations that must be noted.
If the document functions as a preliminary contract to get work started before a formal agreement is drafted, then the letter should state that it represents the entire agreement between the two parties. It must also indicate that the contract letter is a binding legal document, and that a more detailed contract will be prepared at a later point.
Typically, the original letter must be signed by the recipient and returned to a specific location by a certain date and time for it to be enacted. There should be a brief statement included at the end of the letter regarding this action for the receiver to refer to. Once received, the recipient’s signature confirms that he or she agrees to the terms of the contract letter prior to beginning work. You may also see printable agreement examples.
The obligations written in the contract would not be imposed unless both parties have signed it. So at the bottom of the contract letter, make sure you have signed the letter directly above your name, your title, today’s date, and your affiliated organization. You must also leave a blank line for the recipient to sign and date the letter. You may also like agreement examples in word.
A well-written contract agreement letter should respond to all the questions an employee might have and leaves out any ambiguity that can lead to misconceptions or confusion. Letter of agreements are used to protect the rights of both the employer and the employee to ensure that the professional relationship start off with clear expectations from both parties.
So if you hope to work with a prospective business, client, investor, or employee for an urgent project, make sure you know how to create a contract agreement letter in a swift.