Call Our Proven Jury Trial & Business Law Advocates for a Free Consultation 317-843-2606

Business contracts are an important part of operating any enterprise. These documents serve as the guidelines by which you will enjoy mutually beneficial relationships with your partners, vendors, subcontractors, and more. Today’s tips can help you better understand the purpose of these legal documents and how to best enter into an agreement that’s binding and fair for all.

Do I Really Need A Legal Contract?

In a nutshell, yes. Say that you open a business with a friend. You both agree that one of you will put up more financial capital and the other more time and effort into running the business. For this, you agree to split your profits 50/50.

However, despite your financial injection, your partner chooses to pay themselves a share of profits proportional to the time they put into the business. In this case, you may have a difficult time proving your verbal agreement. Keep in mind, however, that verbal agreements may be enforceable; they are just more difficult to prove.

A legally-binding contract will clearly spell out each of your roles and responsibilities, compensation, and expectations so that there’s no question of who gets what.

A Partnership Agreement Should Be Your First Document

With this thought in mind, it’s smart to create a general partnership agreement before you begin your business together. This is an unincorporated structure that outlines business responsibilities and, when written well, can help you overrule your state’s local default guidelines, which may or may not be in your and your partner’s best interest.

When drafting a partnership agreement, you will need everyone’s full legal name, their financial and physical contributions, expected administrative and managerial duties, and a list of procedures you expect to follow. This agreement offers simplified taxes, and you won’t have to file an annual report.

E-Signing Versus Physical Signing

Before the advent of the internet, contracts had to be signed in person, and this often required a notary to witness the event. While this is still common practice in many areas, you may want to try e-signing documents. This is more convenient, and you can use a tool that allows you to sign an editable PDF document, which can then be stored and shared securely.

There are many rules and regulations that go into electronic signatures, and these types of documents can easily be tracked for unauthorized changes. Keep in mind, however, that different countries may have different enforceable laws when it comes to e-signatures. However, the vast majority require, at minimum, that there be intent to sign electronically, a digital audit trail, signature protection, multiple copies, record retention, and an opt-out clause.

Your Words Matter

When drafting a legal document, it’s important that both parties understand the agreement completely. While it’s smart to have the document drafted and reviewed by an attorney, make sure that the wording is such that there is no question on meaning or interpretation. In this case, it’s better to use more common language instead of legal jargon. The goal is to have a complete understanding of each other so that there is no question of your intent and responsibilities.

Ultimately, having a legal agreement in place is one of the best things you can do for your business, whether you are a one-man show or a multi-level corporation. And whether you choose to electronically sign your documents or stick with an in-person signature and handshake, having a tangible and relatable agreement in place is one small way you can protect your interests and that of your business.

Contact Goodin Abernathy

If you’re a business owner or entrepreneur, it’s crucial to have a trusted legal partner on your side to help you create and review legally binding contracts. Goodin Abernathy law firm can provide you with the guidance and expertise you need to protect your interests and those of your business partners. Contact Goodin Abernathy today to learn how their team of experienced attorneys can assist you with your legal needs.