Drafting a business contract is a difficult task, requiring not only agreement on an array of important terms but also requiring strict compliance with the requirements of a legally binding contract. Taking the time to draft all contracts in consultation with an experienced contract lawyer, can save you from later becoming party to an expensive contractual dispute.
1. Failing to communicate closely with a lawyer
It is important to communicate closely with an experienced contract lawyer throughout the drafting process to ensure that the contract accurately reflects the intention of both parties to the contract. A contract that does not reflect the understanding reached, or fails to include all terms is likely to be declared void. This leaves you out of pocket and unprotected by the terms of the contract. Regular consultation with an experienced lawyer throughout the negotiation and drafting process ensures that the contract is drafted correctly and with all important provisions included as they were intended.
2. Drafting unclear and ambiguous provisions
Drafting a contract with clear and well defined terms greatly increases the likelihood of the contract being fulfilled in the way it was intended. Ambiguous provisions create weaknesses in the contract, leaving you vulnerable to loopholes that may allow the other party to escape their contractual obligations. Clear provisions also ensure that you fully understand your obligations under the contract, protecting you from inadvertently breaching an unclear obligation.
3. Failing to include all necessary terms
An experienced lawyer can ensure that all relevant provisions, legal obligations and agreed upon terms are included in a contract. Business contracts are necessarily extensive to protect the interests of all parties in an on going business contract. Overlooking key areas such as terms of renewal, termination or payment leaves your business unprotected by the contract and therefore by the law. Including provisions relating to damages for breaches of the contract and how and where contractual disputes will be resolved, can provide you with legally binding protection against breaches of the contract that may affect your financial position.
4. Leaving some part of the agreement as verbal
It is important to include all aspects of the agreement in the final written contract, this means that even if additional services have been negotiated verbally after the contract has been agreed upon, these additional services need to be drafted, included and also signed. Leaving components of the agreement as purely verbal can lead to serious and costly misunderstandings in relation to the agreement. Furthermore, a written and signed agreement provides you with the protection and evidence that a verbal agreement simply cannot offer.
5. Copying contracts found online
Copying a standard contract found online can be a costly error to make, leaving you unprotected from the individual and specific terms that you require. A contract should be comprehensive, unique and reflect the individual intentions of each party. This cannot be achieved through the use of a standard contract found online. Contracts require you to be as specific and clear as possible to avoid later disputes. This means nothing should be simply assumed and everything should be clearly defined.
Drafting a contract is a process that should never be rushed and should only be commenced once the parties have carefully negotiated and will continue to negotiate the critical terms that should be included. This requires a careful consideration of the relationship you wish to form through the contract, whether business or otherwise, and any potential issues that you think may arise later. Drafting contracts in consultation with an experienced lawyer can ensure that these common mistakes are avoided and that your contracts reflect your intentions and agreements.