All contracts are not created equal. If your business relies on vague, generic contracts to define important relationships, you are setting yourself up for disappointment at best, disaster at worst.
Without proper specificity, your contracts may not be enforceable. Or, even if they are enforceable, a vague contract could be interpreted by a court of law in a very different way than you intended. Below are several key areas in which specificity is vital:
Your contracts must include “valid consideration”. For a contract to be legally binding, it must describe the consideration exchanged by the parties. A simple way to think of consideration is “item of value.” For instance, if you sign a contract with your landscaper, you are promising to exchange money for the service of mowing your lawn. It’s a simple concept, but lack of consideration received by one party could invalidate an entire contract.
The scope of the work needs to be specifically defined. If the scope of your services are not defined, i.e., limited, you may be required to do much more than anticipated before being paid. Quite simply, contracts should state whom is doing what, by when, in exchange for what consideration. The narrower the scope, the easier the contract is to enforce.
The termination clause. At a minimum, your contracts need to cover what happens in the event of breach, insolvency, or impossibility of performance. In some cases it may be wise to include (or exclude) terms for voluntary termination without cause. Failure to specify a mechanism for termination can turn a good contract into a losing proposition in a hurry.
The right of a party to sub-contract work as necessary. If you plan to hire outside contractors in the course of fulfilling a contractual obligation, your agreement must specifically reserve those rights. If working with sub-contractors is part of your business model but perhaps not obvious to your clients, be sure to discuss the issue with a business attorney prior to drafting your contracts.
Lawyers make a living arguing over “terms of art” in contract disputes. Take control of your business by taking control of your contracts, before it’s too late. If you’d like help drafting new agreements or reviewing existing ones, give us a call at (305) 431-5678 today.