Commercial contracts are essential to the health and security of your business. They help prevent misunderstandings that could lead to expensive litigation.
They identify involved parties, their deliverables, transaction details, date, goods or services exchanged, price and how the contract can be terminated. They also contain important clauses like confidentiality and dispute resolution.
Clear Definitions
Commercial contracts help businesses achieve the intended benefit from a transaction. They also serve as a means of minimizing risk and protecting business interests.
Contracts should be clear in identifying the parties involved, the type of transaction, and how the agreement is to be terminated. In addition, contracts should make it clear whether the contract is to be governed by state or foreign laws.
All parties must have the capacity to enter into a contract, meaning that they must be of legal age and of sound mind. They must also be free of any coercion or duress.
While every commercial contract is different, there are a few common elements that most of them share. These include the contracting parties, key terms and conditions, price and payment details, delivery dates, a dispute resolution clause, and provisions to mitigate risk. Keeping these in mind can ensure that you are on the right track with your contracting process.
Specifying the State’s Laws
Specifying the laws that will govern a commercial contract fundamentally determines the enforceability of its provisions. Unfortunately, many US-style contracts hide these crucial terms at the back of the agreement along with other boilerplate language.
New York law imposes on parties the duty to honor their contractual commitments in good faith. It also recognizes the importance of balancing commercially reasonable expectations with contract language, and favoring clear expression over vagueness or ambiguity.
This judicially formulated legal rule makes it easy for international business parties to rely on New York law as the basis of their commercial contracts. It provides predictable rules for contract interpretation and offers specific, special- ized jurisprudence on issues that are of interest to international businesses, such as banking, cross-border transactions, and long-term exclusive dealings contracts. It also allows courts to resolve many interpretation disputes without trial. This is in stark contrast to other jurisdictions, where the choice of substantive law can be a source of uncertainty and risk.
Streamlining the Procurement Process
Procurement is the process by which a business obtains raw materials, supplies, equipment and other products that are essential to operations. It also includes procuring people-based services to support business activities such as maintenance and management of customer-facing systems.
Streamlining the procurement process is a complex leadership-based initiative that requires measurable transparency and accountability across the organization. The process involves changing existing processes in ways that make them faster, simpler and more cost-effective. It also involves ensuring that the company has sufficient resources to grow its revenue and enhance the customer experience.
One of the main barriers to streamlined procurement is a lack of communication between stakeholders. For example, if a supplier’s invoice isn’t attached to a purchase order or doesn’t meet contract terms, it could result in unnecessary delays in payment processing. Creating sourcing initiatives that eliminate these issues by ensuring that each payment is tied to a legal purchase agreement will allow for more efficient invoice processing. It will also provide greater visibility into performance so that both the procurer and supplier can see whether they’re meeting their goals.
Avoiding Mistakes
Commercial contracts are crucial to the operations of most businesses. However, mistakes can have a devastating impact on a company’s reputation and business performance.
These errors can be as minor as a typo or as severe as an incorrect calculation. They can affect the quality of work, lead to costly disputes and derail a project’s timeline. A contract error can also impact a company’s ability to meet its legal obligations.
Commercial contracts can be complex and involve a variety of stakeholders. A streamlined process for creating, negotiating, reviewing, executing and storing them is vital to avoiding errors and improving productivity. With a system in place, legal teams can save time and ensure all parties are up to speed on the latest versions of their contracts. Ironclad’s workflow designer allows you to create a process that facilitates collaboration between internal and external stakeholders, including drafting, revising, redlining and approving contracts in real-time. This way, commercial contracts can be drafted quickly and accurately while meeting regulatory and organization standards.
