Know the party with whom you are contracting to do business
Research similar businesses and determine which business would best accomplish what you desire. Make sure the business is operating on sound principles and licensed to carry out the type of work necessary. Get references if you can.
Be sure you understand the cost of the particular job. A costing bill by a quantity surveyor will detail the estimated costs of labour and materials for each stage of the construction project. Know the cost of all necessary resources to complete the job and budget accordingly.
If you are entering a contract where you are the employee, you should have an idea of the market price for your skills, services or product. Employers often get quotes from the one tasked with carrying out the job when a separate professional to cost the transaction or job is not considered necessary or is not available. Knowing the market rate to give as a quote would mean that you do not overprice the job and therefore lose your competitive edge. It would also mean that you do not under-price your product or service and thus lose income.
Define the product
Make sure it is absolutely clear what type of product or service is being provided, so that you get exactly what you contracted for. For example, the approved architectural drawings of a building should set out what was envisioned by the person contracting the job.
Delivery of the goods or service
It is always important to say by when you want what done. Specify time frames for the delivery of the product or service. It should also be made clear when payment is due.
Condition of the product or service
In addition to knowing the product and service being rendered, find out any condition on the product or service. Are the items new or used? If it is a service contract, find out whether any particular job will be outsourced by your main contact; contractors often outsource jobs that they are not capable of completing themselves. For example, a contractor may use the services of a company that specializes in mixing concrete if he or she does not own their own concrete mixer.
Warranties have to do with determining what guaranties there are on the product or service. The procedure for repairing or replacing an item or correcting a service mistake should also be outlined.
Getting out of the Contract
While most contracts are made to avoid getting out of them, you can sometimes negotiate an “out” clause for poor performance, late delivery, lack of proper delivery or other essential matters.
Renewal of the contract
The renewal of a contract occurs mostly with reoccurring jobs, for example, exterminating treatments. From the beginning of a contract it should be established whether there would be an automatic renewal or whether the provided service or product is a one-off transaction.
Two ways to default on a contract include non-payment and non-performance. Non-payment covers not getting paid in full, on time, or at all. Non-performance relates to not doing the job properly, or not doing it to the standard and specifications outlined in the contract. It may also refer to not completing a job. Remedies provide a way to deal with these problems.
Remedies offer compensation to the injured party for any default in the contract. This is the portion of the contract that directly seeks and makes provision for the protection of both parties signing the contract. It also serves as a failsafe to ensure that the stipulations within the contract are adhered to.