This may come as a surprise, but contracts rule pretty much every aspect of life. Even a simple transaction like buying your favorite cup of coffee involves some form of a contract.
However, when it comes to business partnerships, a good contract can mean the difference between a successful venture and one characterized by conflicts and misunderstandings. As such, it is important that you look out for these common mistakes when creating your partnership agreement.
Failing to have it in writing
You may have heard the adage, “if it is not written, it probably never happened.” This is absolutely true as far as business contracts go. One of the primary reasons for having a partnership contract is to clarify each party’s roles and expectations while averting potential conflicts. Without a valid contract, you will certainly have nothing to refer to should misunderstandings arise down the road.
Relying on a template
There is certainly no such thing as a “standard partnership contract.” Unfortunately, one of the common mistakes prospective partners make when working out a partnership contract is copy-pasting contracts from previous engagements or from online resources. It is important to personalize your contract to suit your situation and partnership goals. Without a tailor-made partnership contract, you could be setting your investment up for failure.
Signing without reading and understanding
This should be straightforward. Never, ever sign any document without first reading and understanding what you are getting into. It is easy to make excuses why you signed the contract without reading it, like the inability to understand the legalese. However, by failing to read and understand the contract, the other party could include provisions that are unfavorable to you.
A sound contract is crucial for the success of any business partnership. Find out how you can safeguard your rights and interests while drafting a partnership contract.