At the Trembly Law Firm, we work closely with business owners every day, helping them navigate a myriad of potential disruptive legal issues.
While some of these legal issues are unavoidable, many of these disputes could have been avoided if the business owner had taken the proper precautions before signing a contract.
Below, we highlight four of the most common mistakes to avoid in your business contracts.
1. Avoid verbal contracts. Yes, verbal contracts are enforceable! Proving the terms of a verbal contract is difficult, however, and your counterpart is free to (and will) remember the terms of the agreement most benefiting to them. Why take the chance? The answer is often money and time – it’s cheaper and easier to move forward without taking the time to memorialize an agreement, in writing. If the agreement is complex or more than a nominal fee is at stake, it’s critical to have your contract in writing.
2. Avoid contracts that no one can understand. Reading contracts isn’t necessarily fun, but you should understand and agree to all the terms before signing. Take the time to read the contract thoroughly and ensure you understand the scope. If the contract seems unclear, request the ambiguous language be simplified before you sign.
3. Avoid vagueness. Be very clear about what is to be paid, to whom, when, and for what. Don’t forget contingencies. What happens if one of the parties to the contract defaults? If a party to the contract is injured or dies? Making sure every minor angle is covered can prevent major headaches down the road.
4. Don’t ignore the expiration date. No contract lasts forever. When may your contract be terminated? Under what circumstances? Does it automatically renew? The circumstances that constitute completion of contract should be carefully written. And what if one party hasn’t fulfilled the terms of the contract by the specified end date? Again, all contingencies should be accounted for to avoid future disputes.
Contractual mistakes are common, so if it has happened to you, you’re not alone. Avoid repeating these mistakes by having your contract written or reviewed by a business lawyer who understands how to best protect your business interests. If a contract is critical to your business, it must be constructed correctly. To have your contracts reviewed, please contact us today.
DISCLAIMER – The contents of this blog are general and not to be taken as advice or instructions. Every business is different, and the above might not be applicable to your situation. Before taking action that could have legal ramifications, contact the Trembly Law Firm.