There are a wide range of contracts which need to be used in the course of doing business. Making sure everyone is aware of their rights and obligations from the outset helps to protect your business and can avoid disputes later on.
BEFORE STARTING A BUSINESS RELATIONSHIP
A Letter of Intent, also called a Memorandum of Understanding (MOU), can help to set out the key terms of a potential agreement before you enter into a formally binding contract. A letter of intent typically includes details of the proposed agreement, pre-conditions, key obligations and intended signing date. This document is not legally binding but it can contain certain legally binding clauses such as confidentiality.
SELLING GOODS & SERVICES
A legal agreement for the sale of goods helps to make your customers aware of their rights and obligations, from the moment you start doing business with them. If you are selling goods, you will need a Sale of Goods Agreement (Business to Business). It typically covers a description of what is to be bought, the price, delivery or collection conditions, returns, and how the agreement comes to an end.
Use a Supply of Services Agreement, when one business provides services to another. This agreement will describe the scope of services provided as well as the service levels, timescales, the fees to be paid, and how to change or terminate the agreement.
COLLABORATING & EXPANDING YOUR BUSINESS
A Collaboration Agreement is a binding document that sets out the rules for cooperation between two companies. This is common when two companies must work together to complete a project, and establishes how the companies will work together, who will do what, division, and how the relationship will end.
Business referrals can help to grow a business significantly. It is best to use a Business Referral Agreement that sets out how much, when and how the referrer will be paid their 'fee'.
A late payment letter can be useful and affordable way of chasing up overdue invoices by prompting a customer to pay the overdue invoice.
Use a First Payment Reminder Letter once the payment becomes overdue. Depending on the original agreement you might be able to set a certain number of days before you start charging interest.
If the debt remains outstanding, you should send a Second Payment Reminder Letter at a time you consider reasonable and taking into account the number of days you have given the client to repay the debt.
If the debt remains unpaid, a Final Payment Reminder Letter will communicate that you are prepared to commence legal action to enforce the debt collection. This is sometime called a 'letter before action' and 14 days is normally the time period given to settle the invoice. At this stage you might want to seek legal advice, though that may depend of the figure outstanding.