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Business Contract Expert Richard D. Harroch Drawing up contracts is an important part of your business. Here are a few tips to help make writing contracts worry-free.

By Lori Francisco

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The idea of writing a business contract can be a littlenerve-wracking for a small-business owner. What should I include?Did I leave anything out? Am I getting everything I need? Am Ifully protected? But contracts are a necessity for every business.If legal mumbo jumbo tends to give you a headache, you can alwaysseek the help of an attorney. But let's face it, attorneys costa lot of money-money that small-business owners often can'tafford to sacrifice. So what do you do when you're working on abudget but you desperately need the assistance of a legalmastermind?

Attorney Richard D.Harroch has put together the Business Contracts Kit For Dummies, a basicguide that outlines a number of important contracts. Innonlegalese, Harroch points out what's important to include inyour contract, what you should and shouldn't negotiate, and howto decide what types of contracts your business needs. Here's alook at some helpful tips that could save you unnecessary headachesand high attorney's fees.

Entrepreneur.com: How do youdecide which business contracts you need?

Richard D. Harroch: If youown a small business, my book goes into the different categories ofcontracts you need. For example, if you're still in the veryearly stages and you're just incorporating your business, thenyou're going to need some important contracts for incorporatingbylaws, buy-sell agreements, things like that. If you're at thepoint where you're a little further advanced and you'reactually hiring employees or consultants, then you'll needoffer letters, employment applications and employment agreements,and the book has a number of examples of those that you can takeand customize to your particular business.

Entrepreneur.com: What arethe basic parts of any contract?

"Themost important thing is making sure that all the things you expectto get from the contract are, in fact, reflected init."

Harroch: Basic parts reallyinclude making sure you're getting all the things you expect toget from the contract. In fact, that's probably the biggestmistake people make in contracts. They don't put in all thethings the other side told them they were going to do or they weregoing to get. For example, let's say you're in negotiationsto lease some space for your small business and the landlord says,"Sure we can paint the office and put some new carpetingin." Then when you get the lease, a lot of the stuff thelandlord told you he was going to do isn't in it. You justassume, as the tenant, that the landlord will do because he toldyou he was going to do it. If there's ever any dispute,however, you'll go back to the lease and there won't beanything there, and so the landlord doesn't really have to doanything. The most important thing is making sure that all thethings you expect to get from the contract are, in fact, reflectedin it.

Entrepreneur.com: What aresome other contract mistakes small-business owners make?

Harroch: One is notincluding all the deal terms. Another is not paying attention tosome of the boilerplate terms that are in there which can reallyaffect you. A third is not having a lawyer review your contractsfor important agreements. Another important mistake is not havingsome kind of termination rights. If the relationship is just notworking out, you want to be able to exit from the agreement with aminimum of financial pain, so building some kind of terminationrights if you're not happy or it doesn't work out isimportant.

Entrepreneur.com: How dobusiness owners know when they need a contract?

Harroch: If it involves anykind of significant dollar amount, you should have a writtencontract that lays out the understanding of both parties-what areyou doing, what's the other side doing, who pays what, whatdate is it paid by, what follow-up is supposed to happen. The kindsof contracts you often see in small businesses are servicecontracts-the business is going to provide some services-and [thecontracts need to include] what those services are, when they haveto be provided by, and what the full scope of those services is.You don't want a contract that says, "I'll do whateverit takes to get your computer systems running." That'sjust way too broad and leaves the small-business owner up in theair with lots of potential liability. You want to specifically layout the things you're going to do and make it very exclusive sothat there's no misunderstanding later.

Entrepreneur.com: As far asonline businesses go, what contracts are important to thosebusinesses?

Harroch: Probably the mostimportant contract is the terms of use agreement or the onlinecontract that's on your Web site. That's a contract betweena person who views your site or uses your site and the site owner.In my book, there's a whole chapter devoted to contractsrelated to Web site creation and a separate chapter related to Website operation with a sample terms of use agreement. The otherimportant contract for your Web site is a privacy policy addressinghow you're going to use the information you're going to getfrom the viewers of your site.

Entrepreneur.com: Should youhave an attorney look at every contract?

Harroch: I don't thinkyou need to have an attorney look over every single one. Forexample, you'd want your attorney to review a standard sales orservice contract. You'd want your attorney to look at that andput in a lot of the good boilerplate and the things that willprotect you. Then as you're entering into sales or servicecontracts with third parties, you can make minor changes with thosecontracts. If you're going to make major changes, then youmight want to consult your attorney again. A good attorney willgive you a good template contract to start from.

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