How to Set up a Contra deal agreement

How to structure a Contra Deal Agreement

Setting up a contra deal agreement requires negotiation between both parties to reach an agreement with which they’re both satisfied. Once this has been achieved, it’s important to place the agreement within a contract so that it’s clear to both parties what the terms of the deal are, and to ensure that there is evidence of the transaction for accounting purposes.

Ensure Contra Deal Contracts are Watertight…

In the event that there is a dispute, a well-written contract also serves as proof of the agreed terms, and should help resolve matters. Since contra deals are essentially a form of bartering, and for many businesses it is a new concept, it can be difficult to construct a legally binding agreement, so any contract should be checked over by a lawyer to ensure it’s watertight.

Here are the main elements of a contra deal, and you can find an example of a contra deal template here.

1. Identity

This is your contact details. You should receive a copy of the other party’s contract with their details filled out, so there’s a record of who you’re doing business with.

2. Product description

Here you provide a description of the product you’re offering (whether it’s goods or services), including serial numbers. Since a contra deal is essentially a sale, it’s important to put in details like this which you’d usually include when selling to a customer.

3. Offer value

Contra deals must be recorded as a regular transaction in your accounting, and the value must be calculated at a reasonable market rate. If your offer does not meet the value of your partner’s, you should outline here how you intend to pay the difference.

3. Desired contra deal

In this section, you should provide a brief outline of the goods or services you expect to receive in exchange for your offer. This serves as a basic record of your request, but you should also receive an itemised list of what you will receive from the other party, in addition to this.

4. Timeline

You should agree a completion date for the contra deal that suits both parties, and put it in writing. This template contract explicitly states that both parties will adhere to the established delivery schedule, which ensures that the deal will be completed by the agreed date.

Contra dealing is a great tool for many businesses, allowing them the flexibility to barter for goods and services that would otherwise be difficult to come by. Be sure to take care when completing a detailed contract in advance, and seek legal assistance if you’re at all unsure, to reap the benefits of contra dealing.