DEAL101x: Structuring Successful Business Deals

Cornell Law School, Cornell University

Tool: Eight Tips for Business Contracts

Drawing up a good business contract requires an understanding of the legal pitfalls and
applicable laws, and should be undertaken with the assistance of an attorney.

Here are a few of the more important things to keep in mind as you consider entering a
contract:

Determine what your goals are for the

1 Identify your goals
agreement. Research the facts surrounding
the agreement. Work out an agreement that
supports your goals.

Avoid making promises or representations

2 Be careful in negotiations
during negotiations, or relying on those
made by the other party.

Not all agreements must be in writing to be

3 Put it in writing
enforceable, but oral contracts can lead to
confusion and legal disputes.

Dont include illusory or ambiguous

4 Avoid unenforceable terms
promises that cannot be enforced.

Use clear, direct language to ensure that

5 Use plain language
both parties understand what they are
agreeing to. If you must use technical
terms, define them.

Try to identify all foreseeable

6 Address contingencies
contingencies, and address them in the
agreement.

Make sure the contract captures the entire

7 Cover the full scope
agreement. Dont rely on oral
understandings that may lead to disputes.

Include language that addresses possible

8 Consider remedies
breaches of the contract. A liquidated
damages provision can avoid legal hassles
by having the parties agree on a certain
remedy ahead of time.

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