One of the most basic building blocks of good business is having a valid and concrete contract. Contracts, by nature, are meant to be a safeguard for both parties of the business agreement. When both parties agree upon the terms of a contract and sign, you’re taking the preemptive step to prevent any potential disagreements. If things go south, a contract gives you the ability to enforce those terms.

Contracts prevent misunderstandings. When an agreement has been hashed out between both parties, write it all down. Having clear and concise terms that both parties agree to will help shape the expectations and guide the performance of your duties. A contract ensures that both parties understand what the expectations are and what either of you will be receiving during and at the end of your working relationship. Without placing the terms of the agreement in writing, you will subject yourself and your company to legal headaches.

It is important to establish the scope of the agreement within the contract so that both parties understand their role within the agreement.

So, you want to get paid right? Having a signed contract means that you and the other party have agreed ahead of time on how and when you’ll be paid, and what happens if they stiff you at the end of the road.

A contract is your safety net just in case anything goes wrong. Once your contract has been signed, both parties are held to certain terms that have been agreed upon beforehand. If either party is found in any way to be in violation of these terms, legal actions can be pursued.