Managing contracts is an essential part of doing business. You and the other companies you do business with count on your contracts to define your promises.
The contract can seem clear as you finalize negotiations, but when it comes time to look at the details, it can get more challenging. If you and the other party did not include in the contract your agreement on how to define some of the critical terms, understanding the contract can seem impossible.
This is what you should keep in mind next time you are negotiating a contract for your business.
Negotiating definitions of terms
It may seem unnecessary to discuss how you will define some of the key terms of a contract as you negotiate what you want. The way you use contract terms while working in your business sector may make sense to you, but someone else could interpret them differently.
As you discuss your contract, talk about what the terms mean in your business and how it will impact the agreement.
Also, consider including a definition section in your contract. That way, if there is a disagreement later, you can look back at how you agreed to define the terms.
Updating contracts
Your forms should be reviewed and regularly updated to incorporate changes in your business structure and in the law, as well as terms that address lessons learned through experience. When you agree on specific definitions for the terms in your agreements with a particular partner, it can be helpful if all of your written agreements with them consistently use the same definitions.
It is essential to review your contracts every time a contract-period passes. While new consideration may be needed to change a contract, reviewing the language each time you renew a contract with another company can help your agreement have the most up-to-date language for your business.