A guide on developing your first contra-deal contract

Many businesses are attracted by the idea of a contra deal as it allows them to reduce overhead costs and network with other businesses to work with. Unfortunately, this is as far as many companies go in their contra-dealing venture. To overcome the early obstacles, here is our guide on how to set up your first contra-deal contract.

  1. Make sure you get an outline of the company you are working with

The first step is to fully understand the entity you are working with. Are they are Limited Liability Company or a partnership? What industry do they operate in? What is their official trading name? These are the questions that will need to be asked to start your contra deal off on the right foot.

  1. Ensure you both have a suitable ‘product description’ for what you are offering

Once you know who you are dealing with, you should start producing a detailed description of the goods or services you are offering. Be sure to include all the necessary information that you would include in a standard payment transaction. This will help you keep the contra deal legally airtight.

  1. Outline the value of your product and your contra-dealing partners

Once you have a good product description and know who you are producing it for, it is time to work out the value of the goods on the table. If the value of a transaction does not match, the short party should clearly outline how they intend to make up the difference, be it through remuneration or additional contra work.

  1. Make sure you know what you are receiving

When your partner has an outline of what you are offering, you should get a written down description of what they are offering. This will help you work out if the deal is worth it on your end and how it will add value to your business.

  1. Create a timeframe for both party’s obligations to be met

After all the formal arrangements have been made you should create a timeline for the delivery of the respective party’s obligations. We recommend doing this online so that you can work on the timeframe collaboratively and ensure both businesses are happy with the arrangement.


Make sure you get informed on the wider points of contra-dealing

Despite the relative ease at which contra deals can be initiated there are some rules that must be followed to make sure you are operating in the correct way. Be sure to get in contact if you have any questions on the finer legal points around contra-dealing and how to structure one for your business.