Contracts are the backbone of every successful business. No matter the size of the company, every business owner must at least understand the basics and the necessity. Simply having a hand-shake contract or a contract written on a napkin is rarely ever going to be effective. And whether you have poor, unenforceable contract, or a complete lack thereof, it will usually lead to costly litigation and a serious disruption for your business.
To avoid painful repercussions, make sure to take note of these four key contract mistakes your business should avoid at all costs.
1) Foregoing a contract
This is the first and most dangerous mistake. Far too many business owners believe they can rely on a handshake and someone’s promises. Unfortunately, that’s not the world we live in, and there is far too much at stake for you to neglect the use of contracts in your business dealings. This is where a knowledgeable attorney comes in. Skipping the contract means there is no accountability to any deals or agreements you make. Sure, verbal agreements are allowable, but they are extremely difficult to prove. If your vendor stops delivering essential widgets to your business, it is hard to show that the vendor had a legally binding responsibility to do so. Without a written contract, there is nothing holding the vendor to their word. A contract is not a guarantee that your business will avoid all legal issues, but it is a valuable safety net that is necessary to mitigate costly risks and liabilities.
2) Going it alone
As the facetious saying goes, “Everybody’s an expert.” We live in a time where the internet has connected us to information and knowledge that was much more difficult to acquire in the past. Need an employment contract? Simply Google it and fine a template and fill in the blanks yourself, right? Unfortunately, a poorly executed contract or a contract which is not unique to your specific needs can be just as damaging as not having a contract at all. Contracts are FAR too important to take a cookie cutter approach. There are nuances to every deal which must be properly analyzed and accounted for by a skilled business attorney like those at The Campbell Law Group. Don’t fall into the trap of trying to save a buck or two on your contracts by doing it yourself. You’ll likely spend thousands more when your contract is exposed to legal challenges.
For contracts, always keep it specific. This is a good rule of thumb in almost all cases. Vague and ambiguous terms are not a contract drafter’s friend. Judges do not appreciate vagueness either. If you are referencing a singular transaction, be as specific as possible. Judges are not in the habit of throwing out contracts because the contract was too specific, but they will certainly give an opposing party leeway if aspects of the contract could have easily been misinterpreted or understood to mean more than one thing. Again, an attorney will know how best to describe terms based on your unique situation.
4) Excluding vital terms
If you are inexperienced with drafting contracts, it is easy to leave out vital clauses and wording which may seem insignificant to the untrained eye, but is actually a lynchpin in a contract’s effectiveness. Of course, these type of necessary inclusions will vary based on your goals in drafting the contract, so always have an attorney review the circumstances of your situation and then help you build a contract to suit your needs.
The attorneys at The Campbell Law Group are standing by to help you with all of your contractual needs, including negotiations, drafting, and reviewing existing contracts in order to uncover liabilities. Please give us a call today to learn how we can help!