Operating a company can be overwhelming, especially if your business starts to pick up. With an increase in product or service demand, your business will also need to adjust. You may need to hire more employees, attract additional investors and update agreement terms with your suppliers. With this striking change, you may be tempted to use the same contract template for all your business relations. However, this is usually not a great idea and may lead to complications later on.
Every business relationship has different rights and obligations
As a business owner, you must understand that each business relationship has a unique nature, with each party having different rights and responsibilities. With that in mind, you must create contracts individually. If you really must use standard contracts, at least create one for each type of business relationship, such as:
- Investor or partner
- Contractor, supplier or vendor
- Business purchases and sales
Having a unique contract for each business relationship can be useful if there becomes a misunderstanding between parties. The individually curated contract can save you from complications that would have arisen from an unclear and generic agreement.
There are special considerations
Related to the above-mentioned point, there may be unique circumstances surrounding the business agreement that you may not usually see in other contracts. For instance, while average interest rates range between 6 to 10%, a business sale contract may stipulate a 12% interest due to the buyer’s history of delayed payments. Of course, you cannot use this contract when you enter into business relations with another entity.
Creating a new contract for every business relationship can be taxing. However, it will save you a great deal of time, energy and resources than if you used a standard contract, which could expose you to legal complications and similar risks.