When it comes to forming a B2B contract, omitting details can lead to confusion, as well as miscommunication. The following five features are crucial to a successful contract.
1) Clearly label the parties within the contract
To specify those who are bound to the contract, the full name of the companies must be included. This is to avoid any potential confusion concerning the identity of the parties involved.
However, it is possible for companies to legally change their names, so the country of incorporation, as well as the registration number of the companies should also be clear.
To elucidate further, details such as the name of representatives and the official registered address will provide extra assurance as to the identity of the parties included in the contract.
2) Specify the services or products
To maintain clarity within the confines of the contract, as much detail as possible must be given when writing about the services or products, preferably in a dedicated section. Doing so will increase the overall clarity of the contract and reduce any chance of misunderstanding.
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3) Mention all costs
When detailing the services or products of a contract, it is extremely important to include any costs associated with these. In a similar vein to the previous points, this is to help reduce any confusion. We recommend the following seven items to be clearly stated in the contract:
- The cost of the product
- The quantity of the product
- The time scale of the stated price
- Any concessions to the price
- Terms of payment
- Interest applied
- Number of transactions
The cost and quantity of the product are very important, however, it is equally important not to forget the time scale of the stated price. By stating the time scale outright, you can avoid potential confusion if any initial concessions are made to the price.
If any concessions to the price are made, this should also be clearly stated within the contract. Concessions can also be made if the buyer purchases the product in greater or fewer numbers. It is good practice, and helpful to both parties, to label this plainly and in detail.
The terms of payment should be written out as well. These terms should neatly lay out how often payments should be made and their associated time scale.
Any interest applied, or to be applied to payments, must be stated in the contract, ideally preventing miscommunication between the involved parties regarding the price of the product.
Finally, the contract should also include the total number of transactions that are to be made.
4) Detail any associated dates
Emphasis should be given to specifying important dates and deadlines, which include but are not limited to:
- When the contract shall begin (and end if applicable)
- The total length of the contract
- The date on which payment is due
- Denoting the time frame of critical milestones
All contracts must have an agreed-upon starting date, which must be clearly labeled within the contract. For further clarity, expectations should be set out concerning when payment is due, as well as when particular milestones should be achieved.
5) Include signatures of associated parties
For the contract to be considered legally binding, the representatives of both parties should present their signature on the contract. Without this, either party cannot be held responsible by law to uphold their side of the transaction.
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We hope that the five topics covered in this post help shine some light on what crucial material must be included in a B2B contract. By including these features, you will minimise any potential confusion and provide maximum clarity for all parties involved.