A well-constructed contract clarifies agreements between parties and makes litigation far less likely. That protects you, your business, your reputation and your assets. Therefore, it’s important to avoid errors and get things right.
The wrong move can make your contract either worthless or an actual liability. If you don’t want problems, avoid these contract mistakes:
- Being obviously unfair: A one-sided contract that’s clearly unfair and gives the other party no recourse when something goes wrong on your end can cause a court to declare the whole deal “unconscionable.” Further, you could sour your reputation in your industry.
- Breaking the law: Every business has unique legal challenges and requirements under government regulations. You have to understand the federal, state and local laws that apply to your situation before you draw up a contract. An illegal contract is no contract at all.
- Using confusing language: Contracts need to be unambiguous and clear. Badly-worded contracts that are either so heavy in “legalese” as to be unintelligible or wording that’s too casual can both be a problem.
- Negotiating without a plan: You need to have your priorities clear when you craft a contract. Otherwise, you may end up with a lengthy document that creates more problems than it solves and alienates your partners. It could also lead to clauses that conflict each other, which may invalidate all or part of your agreement.
An effective contract helps both parties feel comfortable about their rights and their obligations — and their options if something doesn’t go according to plan. An experienced attorney can help you craft the contracts your business needs to avoid unnecessary conflicts.