Why Should My Business Invoice or Proposal Be in Contract Form?
Drafting formal contracts for business forms may appear time-consuming and costly. However, there are many advantages to using full-fledged contracts for your invoices and business proposals; they outweigh the initial cost invested in drafting the contract templates. Our Coral Springs business law attorney discusses some of these advantages in this blog.
Invoices and Proposals May Not Be Legally Binding Agreements
Typically, a basic invoice or business proposal is not a legally binding agreement. An invoice is a billing statement, and a proposal is typically used to initiate negotiations for a business transaction. These documents contain the minimum requirements for billing clients or proposing a sale or business transaction.
A contract clearly outlines the terms and conditions that define all the various legalities associated with the transaction. The contract stipulates contingencies, requirements, terms, due dates, fees, cancellations, and consequences of a breach. If either party fails to abide by the terms of the contract, it is much easier to pursue legal action and succeed if you have a binding, executed contract instead of a simple invoice or proposal.
Contracts Contain Additional Language to Protect Your Company
It is important to protect your company’s intellectual property, licenses, and trade secrets. A contract allows you to include various non-disclosure, confidentiality, and non-compete clauses that protect your business during a transaction.
Confidentiality clauses are especially important when you are generating a proposal. Within the proposal, you may need to discuss confidential information. If you do not have a written, binding contract requiring the other party to protect the confidentiality of any disclosed information, the party might use the information you disclose for profit.
Contracts Reduce Disputes
When you use a detailed, written contract instead of a simple invoice or proposal, you reduce the chance that there will be disputes. Contracts should be clear and contain detailed information regarding every aspect of the business transaction. By providing detailed information in the contract, you reduce the chance that either party has doubts or questions about the terms and conditions of the agreement. There is no second-guessing whether you agree to replace an item or perform other services without additional compensation. The contract answers all questions related to the transaction, so there is no chance for misinterpretation.
Contracts Allow You to Get Out of a Transaction if Necessary
A contract helps you enforce the terms of a business transaction, but it can also provide for an “out” if necessary. Within the contract, you should also include terms of dissolution. The terms of dissolution outline your rights to terminate the contract without further liability to the other party. It is mutually beneficial for both parties to have a contract with clearly defined terms of dissolution in case a party does not fulfill the terms of the transaction, or circumstances change that necessitates ending the contract for a covered reason.
Contracts Add a Level of Professionalism to Your Company
Using contracts instead of simple invoices or proposals adds to the professional image of your company. This benefit can improve your chances of attracting additional business from larger companies and organizations that are more comfortable dealing with written contracts instead of informal proposals and invoices.
Contact a Florida Business Law Attorney to Discuss Ways to Protect Your Company and Property
Matthew Fornaro provides comprehensive business law services to individuals, companies, and businesses in Coral Springs, Parkland, and throughout Broward County. To request a consultation, call 954-324-3651 or contact us online.