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An overview of business-to-business (B2B) contracts

by | Apr 2, 2021 | Business Law

Many businesses provide goods and services to other businesses. The contract between the businesses, often referred to as B2B (business to business) contracts, is extremely important. B2B contracts set forth the terms, conditions, and obligations of the agreement between the parties. By putting the material components of the agreement in writing, the parties are in a much better position to hold each other accountable to their respective obligations.

B2B contracts involve two business entities doing business with each other

What are B2B contracts?

B2B contracts are contracts that are created between two business entities that are doing business with each other. B2B contracts differ from other contracts because they specifically involve two business entities; therefore, the bargaining power for both businesses may be fairly even. For example, if you are a retail business, you likely do business with the manufacturers of the products you sell. B2B contracts allow each business to establish an agreement for exchange of products/services and compensation.


What is included in a B2B contract?

  1. Name of the parties involved: In every contract, it is important to name all parties involved. This helps lay the foundation of a good legal contract. Along with their names, you should include the contact information, such as the phone number, email, and address.
  1. Details of the agreement: The details of the agreement should also be clearly laid out. This will include what services will be rendered or what products will need to be produced. If one business is providing products for the other, the amount should also be stated.
  1. Timeframe of the agreement: Each B2B contract should have the timeframe that the agreement is enforceable for. This is important to include in your contract to reduce confusion and possible future conflict.
  1. Terms of payments: Payment terms must be set forth clearly and in detail. The party paying for the goods or services must know when, how much, how often, and under what other terms payments must be made. Failure to include specific payment terms could lead to faulty payment or no payment at all.
  1. How disputes will be settled: Many companies choose to provide an agreement as to how possible disputes should be handled. Time and money are important to business, which is why many choose to include a mediation or arbitration clause. Mediation and arbitration can be more time and cost effective than general civil court litigation.

B2B contracts in Wisconsin:

In 2011, Wisconsin created an exception to the automatic renewal of contracts that specifically involved B2B contracts, which is referred to as Wisconsin Stat. 134.49. Overall, this statute makes it much harder for automatic renewal clauses to be enforceable in B2B contracts. This helps protect businesses by providing a clear notice on the terms of the agreement in regard to timeframe and renewal of the contract.

An experienced attorney can help you with your B2B contract

It is important to create a fair, enforceable B2B contract. Business lawyers can help you draft or negotiate a B2B contract. To understand how an attorney can help you with your specific situation, contact the business lawyers at McDonald & Kloth, LLC.