When you put your pen to paper, you could be signing yourself up for a secure future or one of frustration.
A business contract is a legally binding agreement between two parties outlining the terms and conditions of a transaction.
There are different types of business contracts from employee contracts to confidentiality agreements.
If you want to run a successful venture, you will have to draft and sign business contracts. They help to ensure that all parties are on the same page while protecting your rights.
By understanding common pitfalls to avoid, it can help to safeguard your business from future disputes.
Here are five of the common mistakes that businesses make in contracts:
1. Lack of Clarity
You must ensure that all the terms are clearly outlined in your contracts. There shouldn’t be any room for confusion or misinterpretations. Failure to do this can lead to room for disputes over different terms.
2. Legal Compliance
Business contracts are legally binding, meaning you must understand what you are signing for. Failure to do so can put you at significant risk. It is worth consulting a legal professional to review the terms and help you understand the legal implications.
3. Lacking a Termination Clause
Termination clauses outline the conditions under which a contract can be ended early. Not including one can lead to parties being stuck in a contract with no clear way to exit.
4. Liability Limitations
A liability clause limits your liability to your customer if things go wrong. Without this in place, there would be no limit on how much you could be sued for. Clauses like these help with risk management.
5. Verbal Agreements
It can be more convenient to get a verbal agreement from a supplier or client, but they are much harder to enforce. Always get your contracts sealed in writing. This can help provide clarity and is invaluable in the event of a dispute.
Business contracts can be confusing, making it easy to just sign them and move on. If you do not fully understand what you are signing, do not sign it.
At Lawhaven Law Firm, we assist clients with all commercial and corporate aspects of their business. If you need professional advice on your business contracts, book an appointment. Your first consultation is free!