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Why Are Contracts Your Most Important Business Tool?

Once upon a time, a handshake was all that was needed to end negotiations and confirm that all parties agreed on the next step. In this day and age, a handshake isn’t enough; a solid, binding contract is what’s needed to ensure that your business is protected and your profits can grow. No matter what kind of sector you work in or how you run your business, there are going to be times when you need a contract. 

In business, as in life, problems can occur. A good relationship can turn into a bad one. Promises can be broken. Mistakes can be made. When you have a good contract in place, these problems and mistakes can be rectified relatively quickly and with little fuss. Certainly you won’t lose too much in the process. Without a contract, and you might face a prolonged, expensive court battle; you might even have to close your business for good. So what is it about contracts, drawn up by specialist commercial solicitors, that can make so much difference? Read on to find out. 

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Protection For You And Your Client 

The essence of a contract is that it is there to protect not just you but also your client from anything that might go wrong. When you both agreed to the terms of your business together, the contract should have been drawn up to reflect these terms, and to ensure that everyone is doing what they should be doing to make the business run smoothly. 

The contract is a way to stop any disagreements before they begin. These disagreements can be expensive and time-consuming, and can cause any future projects you have together to be strained; they might cut a potentially lucrative deal short. By having a contract in place that clearly spells out what is expected of each party, everyone can be protected. 

Prevents Misunderstandings 

What someone says and what they mean can be two entirely different things. Even when (or especially when) there is no malice involved, a simple misunderstanding can cause all kinds of problems, with one party expecting one result, and the other party delivering something quite different. 

Having a contract that is agreed upon by both sides of the partnership means that there won’t be any problematic misunderstandings. Everything will be laid out clearly, and if either side has a question or needs clarification on something, they can get this before the contract is signed. Amendments can then be made to make it all even clearer, and the job can begin. 

Legally Binding 

A contract is legally binding (which is why it’s best to use a professional solicitor who has experience in contracts to guide you through the process), which means that if either side reneges on anything within the contract, the other part is within their rights to take them to court to obtain satisfaction. 

Although this might make contracts sound rather ominous and serious, the truth is that, if something were to happen and you had no contract to fall back on, your hard work and any money spent would be lost. With a contract in place, although things can still go wrong, you’ll have recourse for redress, and this is a crucial point. 

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