While no business can remove itself entirely from the risk of litigation, a well-written contract can certainly help. Your contracts should always serve your business, your relationships, and the deal at hand by providing both protection and a set of terms that clearly define the agreement. With these aspects of a quality contract in mind, you’ll be able to handle business disputes in the best way possible – preventing them in the first place.
- Provide Clarity
Many contracts fall into the trap of becoming too focused on the results of a transaction, and not enough on the means by which that transaction is going to happen. Effective contracts should clearly establish the standards and expectations for common issues like deliverables, timeframes, or payment. When contracts are not clear on the details of how these should be handled, they leave room for potential disputes.
- Start From Scratch
Unfortunately, it’s become a common practice to begin contracts from a template. While this can save time, and ensure that standardized parts of the contract are kept consistent, it often results in oversights in other areas. This can lead to the business itself not knowing exactly what the contract says, or critical aspects being left out. Starting from scratch ensures that every part of the contract is added and taken into consideration. There’s no issue in referencing similar contracts, but each one should be built from the ground up with the current deal in mind.
- Plan for Disputes
No contract is perfect, and almost every business will run into some trouble down the road. Although our goal is to avoid disputes, we can’t ignore the possibility. Your contracts should include well-defined avenues for resolving business disputes, including where and how they’ll be resolved. Hopefully, they won’t come into play. But if they do, having an established method of dispute resolution will provide a significantly easier and safer route than leaving it open to argumentation.
- Know your Clauses
Part of building your contract from the ground up is deciding on which clauses will be necessary, and how to apply them. We’ve discussed force majeure at length, and how it has become even more relevant in light of recent events. Clauses such as force majeure can often be the single barrier between your business and the courtroom. As such, these clauses need to be exceptionally well-defined and clear in where they apply. The clauses of your contracts should account for contingencies, and provide clear guidelines on how to handle them.
- Consult an Attorney
Contracts can make or break your business, and as such, shouldn’t be taken lightly. An experienced business law attorney is essential to drafting effective contracts that serve their purpose. Baker Jenner LLP can provide your business with our experienced legal strategy to ensure that your contracts remain highly effective. Contact us today to schedule your consultation.
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