Closing a deal with another company for the transfer of goods for payment seems like it should be easy. However, when dealing with multiple moving parts in a deal exchange involving two different companies, it can be complex. More specifically, when creating a product that needs to meet a specific specification for resale or company use. That is why a contract is needed. Arrangements can be complicated and involve a lot of work. That is why I’ve comprised some tips on how to make your contracts as airtight as possible.
This is where you don’t leave anything out, don’t hold your breath. Make your priorities and concerns known. Don’t move on to a different issue until the current solution is reached.
2. Document negotiations
Keep track of what everyone is saying. This is important when resolving conflict and creating solutions.
3. Be concise & detailed
You should be able to understand the contract with ease. You should cut any unnecessary words or phrases. The obligations of each party should be spelled out in specific language that doesn’t leave any room for mixed interpretation. Having a detailed product requirements and clear Statement of Work (SOW) for the project manager, will help confusion. If not, it will result in the organization not receiving the agreed upon product or services.
4. Include payment details
The objective of a contract is for the buyer to receive expected product while the seller receives payment. In many complex deals with multiple moving parts, the buyer can pay the seller along the way as milestones are completed.
5. Include Language on How to Terminate the Contract
This should be in the contract in the case that one party doesn’t uphold their end of the bargain. It will be easier to deal with these situations before they become real life.
6. Don’t start until it’s signed
There is no need to rush into a project before the contract is signed. This could lead to unnecessary work.
The Contract Team
When creating a contract, it is important to have the right people around you. Finding the correct stakeholders that will produce the product. In a smaller business this might only be the owner and another person, but in a large business, it can involve many different individuals. For example, a large company may have a project manager, engineering manager, manufacturing manager, financial manager or support manager. The objective is to find those managers that will speak honestly about being able to complete your contract specifics. Most importantly the schedule. How long will it take their team to create the product? The worst thing that can happen is not being able to uphold the project’s timeline.