Important Components of an Excellent Contract

Contract negotiations have always been an integral part of doing business most especially these days wherein people do not necessarily have to see each other face-to-face to do business because of e-commerce. A signed contract or mutual agreement is a simple document which earns trust for both parties to work on their responsibilities as business partners due to their signed liability towards each other.
There are important components which one should note of when preparing or signing a contract. In the field of white label marketing, there may be special points to consider which may differ from standard contracts or agreements. Here are the important components you should remember with white label agreements.

 

White Label Agreement Components

1. Scope and duration of the partnership

This component specifies the scope or reach of the agreement both parties are responsible and liable for. Any point beyond the said scope are no longer covered by the agreement and falls under its own liability depending on the situation and circumstances. The duration of the partnership should also be specified for both parties to know when the agreement will take effect and when it will end and bound to be renewed/terminated.

2. License and legalities

Licenses need not be attached in the contract but should be presented to the parties involved for verification as proof of legality and eligibility of the partnership’s operations moving forward. This component is important for both parties to feel secure and trust each other.

3. Obligations and responsibilities

The contract must clearly state the obligations and responsibilities of the parties involved which may include but not limited to business functions, risk management, financial responsibilities, etc. and most especially in complying with legal terms and conditions.

4. Revenue sharing

It is important to specify revenue shares because partnerships do not always mean a 50/50 sharing due to varying responsibilities and capital investment on the business. Most partnerships fail because of disagreements on this aspect or this component got overlooked during the contract negotiation process leading to a fallout or worse, a legal battle between both parties.

5. Intellectual property rights

Most of the time, the client owns all intellectual property rights of the product while suppliers, manufacturers, sourcing companies and other parties involved in the manufacturing process are only credited for their services and contributions to the creation of the product. This component may vary depending on the circumstances wherein any of the parties involved may play a significant role to product conceptualization or the concept was totally vague when presented.
There could be other clauses and components which may be included in white label agreements, but the ones mentioned above should be the most important ones. Preparing or signing contracts/agreements not only in a white label environment but in all of business can be quite risky. It is advisable to ask for assistance from an industry lawyer to oversee and review the contract in your behalf before you sign anything as part of the risk management process.