Business contracts are legally binding written agreements between two or more parties. They are an important part of business and such agreements need to be created and/or reviewed carefully.

While smaller companies often conduct business based on informal handshake agreements or unspoken understandings, the more that is at stake, the more essential it is to have a signed contract. A contract serves as a guide and a memorial of the agreement that must be followed by both parties. It presents each party with the opportunity to:

• Describe all obligations they are expected to fulfill
• Describe all obligations they expect the other party or parties to fulfill
• Limit any liabilities
• Set parameters, such as a time frame, in which the terms of the contract will be met
• Set terms of a sale, lease, or rental
• Establish payment terms
• Clearly establish all of the risks and responsibilities of the parties