Contracts make the business world go round — but you might be surprised at some of the simple yet critical steps that business owners can skip when they’re preparing an important contract. Do everything you can to avoid these potentially catastrophic contract mistakes:
Trying to get by without a contract – While it’s true that some verbal contracts are legally binding, it’s also true that others must be set in writing before they can be considered enforceable. Even if you’re working with an individual or entity that you’ve known and trusted for years, you should protect yourself as thoroughly as possible by creating a written contract.
Not addressing breaches – What happens if one party breaches the terms of the contract? What actions would be considered a breach in the first place? If you haven’t addressed these points in the contract itself, you’re setting the stage for both parties’ expectations to be grossly misinterpreted or even ignored.
Leaving termination and dispute resolution issues unclear – At some point, your contract may no longer suit either party’s needs or wishes, or the terms of the contract may come under dispute. If you haven’t included the necessary mechanisms for terminating the contract, you may find yourself hopelessly trapped in an unsatisfactory arrangement. If you haven’t allowed for dispute resolution options such as mediation, you may be forced into arbitration or even a lawsuit.
Neglecting questions of contract assignment and/or replacement: Some contracts fail to tackle the question of whether they can be assigned in the event that the business is acquired by another organization. Others fail to clarify whether they replace any previous contracts.
Don’t sabotage yourself by making avoidable contract mistakes. Contact our firm so we can help you create the right contract for your needs.