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6 Benefits of a Contract to Protect Your Business

Operating a business means keeping track of your customer base, looking at financial data and making decisions that improve your bottom line. It's impossible to predict when an incident will occur that could get in the way of your brand's income and reputation, so having a contract in place for protection is key to staying at the top of your game.

If you're a small business owner, establishing a valid contract with a trusted organization helps you handle legal disputes, respond to problems and stay on the path to success. 

Why Do You Need a Valid Contract?

Business contracts describe legally binding agreements between two or more parties. These documents explain the terms of the partnership and the responsibilities of the entities involved. It's common for business contracts to include payment terms, deadlines and the length of relationships. A contract will also outline the rights of each party. 

Here are six benefits of having a valid contract for contacting companies.

1. Setting Expectations

Ideally, a contract will benefit the business creating the document and the contractor signing it. Contracts are excellent for setting expectations for the relationship so that everyone works together smoothly.

Let's say your business is searching for a contractor to complete automotive maintenance. Your contractor would follow the guidelines set in the legally binding document. These guidelines may include arrival time, frequency of service, type of service to complete and relationship duration.

This relationship results in you having company vehicles ready for work, and the contractor receives income for their time.

2. Legal Protection

If something goes wrong during a professional relationship, contracts can be enforced in a court of law to protect one or both parties. Business contracts keep all parties accountable for holding up their ends of an agreement. If one of the parties is responsible for breaching the contract, the other party can take legal action and receive financial compensation for the breach.

3. Compliance With Local Laws

It is your duty as a business owner to generate a contract that follows laws and regulations relevant to your industry. Having an experienced professional draft your business contracts keeps you operating within compliance.

The right contract reduces the risk of penalties and legal fees if an incident occurs while a contractor is working for you.

4. Leverage for Termination

Business contracts keep you in control of who works for your company and for how long. If you are unsatisfied with the work a contractor completes or the opposite party falls short of what you outline in a contract, you can end the relationship per the conditions in your agreement.

5. Intellectual Property Protection

It's possible your small business owns intellectual property such as patents, logos, design patterns, copyrights or trademarks. Mapping out a contract to cover the appropriate use of intellectual property helps safeguard your brand.

Include the terms for using business assets during the professional relationship and after it ends.

6. Protection of Confidential Information

You might hire a contractor for a wide variety of services, meaning an individual from outside your company could access customer contact information, profit data, business forecasts, trade secrets or employee information. 

A well-written contract should feature confidentiality clauses to prevent sensitive data from ending up in the wrong hands.

Business Consumer Alliance Offers Memberships for Support

Business Consumer Alliance caters to small business owners like you with a range of support services. We help you run your company by providing legal advice and arbitration assistance so that you can focus on driving your revenue.

Our professionals are here for you with a membership option that enables you to seek help from a knowledgeable attorney. Let BCA develop and review your business contracts before partnering with someone outside of your organization. It's our goal to help you verify all of your bases are covered before you put your reputation on the line. 

Join the BCA Family 

BCA has over 25 years of experience providing small businesses with sample contracts to protect their assets and confidential information. We're ready to give you the personal level of assistance you deserve when writing and implementing contracts for your small business.

Become a member and see exclusive benefits once you complete a form online!

join the BCA family

About Business Consumer Alliance Business Consumer Alliance (BCA) is a non-profit company that started in 1928. The broad purpose of BCA is to promote business self-regulation. BCA's mission is achieved by assisting consumers in resolving complaints with businesses and using that complaint information, along with other relevant information such as customer reviews, to forecast business reliability. With community support, BCA can identify trustworthy and ethical businesses and warn the public to avoid unscrupulous businesses whose purpose is to defraud the marketplace. BCA also helps businesses promote themselves by providing services and tools to protect their business and reach out to their customers. BCA obtains its funding from member businesses who support the mission and purpose of the organization and who agree to abide by high standards of ethical business practices.