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July 29, 2021

Sales Contracts the Right Way

All sales contracts should be in written form for delivery of products or services.  Clearly outline and detail as needed what each party is agreeing to do.  Anticipate areas of confusion or points of potential conflict.  Provide a recourse (remedy) in case the agreement is not followed. 

Title:  On your business letterhead have a title such as "Contract for Construction"  or "Sale of ____ Product"

Names & addresses of all parties: Who is the customer and who is to be billed for service or product.

Full description of what each party is promising to do:  Specifications will describe the terms of the sale and what intermediate steps the customer will be involved for review, inspection, and when it will be completed.  Reference all drawings that are part of the contract and the control date that will be used.   State critical communication dates (phases) for the customer involvement.

Price of product or service:  Clearly state if it is a firm bid with known pre-existing conditions;  or, labor time & material cost plus an agreed mark up;  or, to be calculated on a schedule with the scope of work determined.

Payment arrangements:  Whether it is paid in full on completion of work/delivery;  or, in installments with interest in the payments due schedule;  or, discounts for early payment.

Warranty:  Statement of any warranty and whether it has any conditions.   Specify if payment is refunded or repaired to new standards.

Change Orders:  Put all change orders in writing whether is has a cost impact or not.  Have both parties sign and date.

Have a Paper Trail:  Take notes (emails) of any transaction with the customer.  Keep a job journal, and keep invoices of materials and/or purchased components.

Permits & Licenses:  Keep all business licenses and permits current.  Never drop business insurance.

Operating Agreement Checklist for LLC and Partnership Agreement
Checklist of common items that should be in Operating Agreements for LLC's and for Partnerships.   The items in the checklist must be discussed and are important to be in written agreement prior to starting a business.  They are the legal parameters of how the business will be managed and disputs resolved after the business is started.   Download a copy of Partnership Agreement Checklist  (LLC).
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