Every business or company, no matter how big, cannot have expertise in every field. More often, they usually require the help of another establishment to complete their projects. That is where the barter system steps in.
By barter system, a business can trade or share its services with another without paying in the form of money. These partnered businesses can be of the same or a completely different type. A very crucial step that makes a business barter system work is to sign a barter Agreement.
What is the Barter Agreement?
A barter agreement is a legal document that enables people and businesses to lawfully exchange goods, services, and different products instead of cash. The principle of agreement is to allow the exchange of only products or services of one party in return for other goods or services of another party.
A barter contract specifies the transaction's intended terms and conditions. It includes the basic questions of what is being exchanged and with whom it is being traded. It will safeguard the interest of both parties by stating their need and requirement for each other.
The barter agreement template is based upon fair trade of the goods as well as other services. This common and fair-trade ground is established when both parties negotiate and agree upon each other’s offer.
Terms and Conditions in A Barter Agreement
To prevent any misunderstanding between the two parties, the terms and conditions for a basic barter contract should be properly formulated. The provisions and clauses added in the barter agreement should be brief yet concise. The following section details the basic requirement of the agreement:
- Contact Information: The detailed information about both parties should be the first step to establish an agreement. The contact information can contain the following elements but is not limited to name, contact number, address, email, and company name.
- The Offering: The next section details what each party is offering. Along with the product details, the offeror specifies the flat or hourly rate, monetary value, and offeree state requested quantity should be noted. Before the agreement, the inspection of the offered goods should also be done. This will ensure that the goods are in expected working order.
- Statement of Barter Agreement: The offeror and the offeree should state their respective names when they agree to accept the conditions of the agreement.
- Terms and Conditions: The desired terms and conditions of both sides should be presented simply and unambiguously to avoid any confusion. They should also decide on the agreed penalty if either party has failed to deliver its services as per the agreement.
- Signatures: Signatures of the representatives of both parties should be taken over the fact that they have both understood and agreed to the term. Upon the signing of the form, the barter agreement and their relationship will be legalized.
Checklist When Signing the Barter Agreement
The barter agreement can be between different people with multiple services to offer. To make sure both parties hold their end of the bargain, the basic yet important provisions must be thoroughly checked. Some of the provisions are as follows:
- Background Check :Complete checking of the qualification, past works, and other references should be carefully done to avoid any loss at a later stage of the barter. In short, do a double-check on the expertise and knowledge of the other party before an agreement.
- Use a Written Contract: Ideally, it is preferred to have proof of the agreement in a black and white document. The contract should set out the extent, expected deliverables, terms and conditions, and the time period of the agreement.
- Calculation of the Worth: Make sure the deal is fair and avoid any vague terms. If not properly done, this one-sided barter can lead to disputes, conflict, and even legal problems. Adjust and negotiate the trade to make it have an equal monetary worth of the goods or services to be exchanged.
- Communication between Parties: Maintain a continuous flow of communication with your bartering partner to ensure that the trade is effective. Ideally, routine check-ins along with communication regarding issues will improve the barter facilities.
- Taxes on Barter: Depending upon the barter, the rules may vary. Tax will be implemented based on the profits of each partner individually.
How to Create A Barter Agreement Online
Since barter agreements can greatly increase your revenues, and most of it depends on another party, it is highly important to create an airtight agreement. In this regard, CocoDoc barter agreement templates are designed to customize the agreement as per your requirement. The available template can be selected and filled by following the below-mentioned steps:
Step 1: Assess the Contract Services
The best approach is to hold a verbal meeting with your prospective partner to identify the extent and type of the offered services. The barter agreement should be based on the consent and agreement of both parties.
Step 2: Decide on an Arrangement
Depending on the use, barter agreement is characterized into two types. It can either be for One-Time Use or an in-process situation. For One-Time, the form is not concluded until both parties supply the bartering goods. But in the in-process situation, the agreement is binding, and trade is made uninterruptedly.
Step 3: Drafting of the Agreement
After settling the requirement of each party, the next important step is to draft and formalize the agreement. For this purpose, the template of the CocoDoc can be selected based upon the needs of the trade. Upon signing an agreement, both parties would be legally bound.
Step 4: Termination of the Contract
The agreement can expire after both sides have traded their goods for a One-Time barter transaction. But for an in-process situation, the agreement is binding until one of the parties terminates the deal.
A barter system can affect your business greatly. To make this effect on a positive slope, careful drafting of a barter agreement is very important. This agreement offers a legal benefit in business as well as in court in case of a dispute. For this, the users can look across the discussed terms to get a better knowledge of the agreement. This would help them design a perfect agreement that would protect the interests of both parties.