Whether it’s a bag of chips or a new release software, no matter what you purchase, each item you buy will come with a contract. When you run a business, you’ll know that as your business grows, the more purchases you’ll need to make to meet your team and client’s expectations. With that, you’ll need to communicate with more vendors and providers to help you meet your needs.
But before you enter into a partnership with a new vendor or provider, or even when buying a product or service, having a contract is crucial. Since you’ll be dealing with a mountain of vendors, having contract management software is essential to organize and manage all your company’s contracts.
However, there’s no denying that contracts can get pretty overwhelming, especially when you have to deal with different vendors. Because of this, it pays to familiarize yourself with the common contract management and procurement terms.
Contract Management and Procurement Terms You Should Know
1. Goods and Services
One of the most important terms in the list is “Goods and Services.” This term identifies the goods and services a vendor will provide you; that’s why it should be clear and specific to avoid confusion and miscommunication.
For instance, if you’re hiring a custom builder to build your dream home, they should communicate the extent of the services and equipment they will provide to meet your expectations in the project.
2. Prices and Payment
Now that you know what goods and services you’ll be receiving, both parties need to agree on payment terms. Prices and payment addresses various questions, like:
- How much are the goods and services? Can they provide a detailed breakdown of the costs?
- What are the payment terms? Do they accept cash, credit cards, or bank transfers? Who will be receiving the payment?
- When are the payments due? Can you pay in installment, or is a lump sum needed?
- What are the penalties for late payments?
With that being said, tracking your contracts is important. That’s why you should have a contract management software that can help streamline and organize all your contracts to ensure you meet all requirements and deadlines.
3. Propriety and Confidentiality Information
In the contract, the owner of the products created from the partnership must be clear. If you want to control the products, it’s important to specify this in the contract and take ownership of the intellectual property.
On the other hand, if you have sensitive data that must be shared with the vendor or supplier, you must take extra steps to protect yourself in the contract. You can do this by including a clause that forbids the other party from sharing confidential information with third parties.
4. Limitation of Liability
Ensure that you have clauses in your contract that allow you to claim damages if you experience severe misconduct, like gross negligence or fraud. And if you experience a major security flaw, you need to specify in your contract that you should be compensated for the error.
5. Breaches and Remediation
There are times when a party would like to break the terms of the contract, and with this happens, you need to be prepared, especially if it was meant to be a long-term or ongoing relationship. If you’re allowing this, you need to include termination in the contract “without clause,” but only after a certain amount of time and with an advanced warning.
The Bottom Line
Contracts are created to meet the expectations of both parties, creating a smoother and trusting relationship.
These are some of the most important terms that should be included in every contract. When these are determined, you’ll have less risk of a complicated legal battle, and both parties will get to meet expected requirements. Of course, if you’re handling many contracts, it’s best to integrate contract management software to ensure that all contracts are accounted for.
How Can We Help You?
One of the most important elements of a partnership is having a strong and detailed contract. This reduces the risks of miscommunication and disputes, allowing you to grow a trusting relationship with your vendors or suppliers. With that being said, having contract management software is crucial to streamline your contract-related needs.
Anapact is a contract management software that provides effective contract management solutions for small and medium-sized businesses. We strive to reduce your risks, empower your team, and simplify your workflow with our contract management software.
Try our software today!