6 things you should include in every contract

At the Office for Small Business Commissioner, we often find small businesses chasing payments they expected to receive within 14 days, only to discover that their client thought (or at least says they thought) they had 60 days to pay.

The frustrating part is that, in some instances, no one has really done anything wrong. The terms were vague, and both parties understood them differently. But the outcome is always the same: the small business, freelancer or sole trader is left out of pocket.

I see this happen far more often than it should, because too many small companies send invoices without clear boundaries. And this is absolutely crucial, because contracts are the only things that are legally enforceable.

What should you actually put in a contract?

Well, you don’t have to fill it with intimidating legal jargon to do its job. A solid commercial contract really just needs to cover six things, in writing:

1. Who’s involved: the legal names of all parties
2. What’s being provided: the specific goods or services
3. How much: quantity or volume
4. Details that matter: quality, known limitations, or conditions
5. How long it lasts: for example, 12 months, or until a project is completed
6. How it ends: including what happens if it ends early

A written contract protects both sides. It’s not just an insurance policy for when things go wrong, rather, it stops things going wrong in the first place. It doesn’t have to be long or complicated. It just has to be clear and honest about how you intend to work together.

Get that right and you’ve done three things at once: prevented misunderstandings, aligned expectations, and given yourself a safety net you can actually enforce.

A few further things worth keeping in mind

• Keep it simple and clear, with no surprises.
• Put it in writing, even if it’s just a few bullet points.
• Negotiate toward a fair deal that works for both sides.
• Compromise where you can, and stay open and respectful.

You can read the Small Business Comissioner’s full contract guide here.

This content is contributed by a guest author. Startups.co.uk / MVF does not endorse or take responsibility for any views, advice, analysis or claims made within this post.