When cooperating with contractors, entrepreneurs should secure their interests through a carefully drafted contract. Not only does it determine rules for the ongoing cooperation but it also provides for the procedure to follow in the case when a dispute occurs. Many of such disputes would last for a shorter time or could be avoided if contractors properly, carefully and exhaustively formulated contracts between them. It could also lead to a reduction of high costs of legal services related to those disputes.
It should be also remembered that some contracts, so as to produce specific legal effects or for their validity, require a written form or a special procedure, for example, signatures certified by a notary or the form of a notarial deed. An example can be a sale of shares of a limited liability company that requires not only a written form, but also signatures certified by a notary. Whereas a contract for sale of real property should be drawn up in the form of a notarial deed or otherwise it is null and void. On the other hand, a contract for specific work, contract of mandate or contract for the provision of services does not require a written form. However, it does not mean that they cannot take this form. It is especially important in the case when these agreements concern deliveries or services of a complex nature or cover transactions of substantial value. Not only does this form enable the contracting parties to specify all their rights and obligations but it also provides protection against a unilateral change of those rights and obligations.
Prior to the conclusion of a contract, it is necessary to verify the contractor both in terms of its financial standing and the legality of its business operations and activities. Poor financial conditions may be indicated by negative information found in press releases or on the Internet. A business partner may also be checked in the Register of Insolvent Debtors or through an analysis of the data included in the Central Registration and Information on Economic Activity (CEIDG) or the National Court Register (partnerships and companies). Information obtained from these sources should also determine the proper representation of the contractor. It should be noticed that the issues mentioned above may affect the validity of concluded agreements.
Contracts should be drafted with precision and in detail. They should determine rights and obligations of both parties. In agreements, it is necessary to stipulate all negative consequences in the event of non-performance or improper performance of obligations. One of the most important elements of a contract are provisions concerning the issue of consideration. They should specify when such pecuniary benefit is to be paid and on what conditions. An agreement should include provisions stipulating the issues of financial settlements in the case of improper or delayed performance of the contract. Regulations concerning the issue of termination of an agreement are also of the essence. Such a comprehensive contract allows the parties to reduce the risk of potential disputes.
It is advisable to include in contracts provisions concerning their enforcement. One of methods most often used for securing proper performance of contracts is a stipulated penalty that is a payment of a specified compensation for non-performance or improper performance of the service specified in the agreement. Each contract may also provide for sanctions on account of withdrawal from the contract for reasons for which the other party bears the liability. All options mentioned above should constitute separate clauses. There are many ways of securing performance of agreements, and they depend on type and nature of contracts, as well as financial resources of parties to them. An example of securing solutions is a pledge, a guarantee provided by another person or a bill of exchange.
Particular attention should be paid to the contents of agreements proposed by the contractor. It is recommended to verify them in terms whether they include disadvantageous or unlawful provisions since, despite their nature, they may be binding for contracting parties conducting business activity. It should be remembered that an entrepreneur cannot benefit from the protection to which consumers are entitled.
Parties to a contract usually should be able to terminate it. Such termination may occur with a specified period of notice, regardless of the reasons. An agreement should also provide for grounds for its termination with immediate effect e.g. when a contractor breaches essential contractual provisions. A contract should also stipulate that it may be terminated only in writing under pain of nullity.
The language of a contract is also of importance. In the case of agreements concluded with domestic contractors, they are drawn up in the Polish language. In the event of a foreign contractor, it is preferable to draw up contracts in two language versions for the purpose of avoiding different meaning and interpretation of expressions used in such agreements.