Why Entrepreneurs Must Know About Contracts

While we often imagine that the drafting of contracts are always done by or with the assistance of lawyers, learning how to prepare one for business is a must for any entrepreneur.

Here are some reasons why you must learn how to draft your own contracts:

Learning how to express your terms clearly. Think of drafting contract as being the same as learning how to express yourself in essays. If you know how to draft your own contract, you would be able to customize it and set different conditions and guarantees in your transactions with other parties. However, if you cannot clearly express your intentions, or your words are too open to a lot of interpretation, you will never be understood, and may even be misinterpreted in the worse way you could imagine. How do you indicate a deadline or a penalty for delay? How do you write different conditions and agreements in one contract? How do you effectively relieve yourself from a certain liability through a waiver? These are just some of the most common things you would want to put in your business contract.

Keeping it legal. Is a waiver relieving the liability of contractors of a building after five years legal? The suppliers were not able to deliver the services you needed for the birthday party of your son, but there is no deadline indicated in the contract—could they just deliver their services some other time? Learning how to draft contracts entails learning what you cannot put into a contract, or making sure that those which you have indicated do not legally take effect. There are even some obligations that, though not stipulated, may be governing your deal unless otherwise agreed and written upon. Every entrepreneur must understand different technicalities brought by the law on obligations and contracts.

Keeping it in writing. A verbal agreement will constitute an obligation, but proving it will be difficult to impossible, unless you have the help of a recording device. But who carries a camcorder and records themselves while talking to other people? Putting your agreements in writing helps record your own dealings and the conditions agreed upon. Besides, having it in writing where you are able to specify the details of a deal gives basis to your claims in case a misunderstanding occurs with the other party.

The above are just a few important points that even non-lawyers must keep in mind when dealing with contracts. Knowledge on the basics of contracts can save you a fortune.

To know more about this topic, BusinessCoach, Inc., a leading business seminar provider, conducts an excellent seminar entitled “Basic Contracts for Non-Lawyers.” Contact (02) 727-5628, (02) 727-8860, (0915) 205-0133 or visit www.businesscoachphil.com for details.

Click here to view details of the seminar: Basic Contracts For Non-Lawyers »

*Originally published by the Manila Bulletin. C-6, Sunday, August 17, 2014. Written by Ruben Anlacan, Jr. (President, BusinessCoach, Inc.) All rights reserved. May not be reproduced or copied without express written permission of the copyright holders.