4 Common Mistakes Business Owners Make When Drafting Contracts
Well-written business contracts are the backbone of a successful business. If you own a business, you may deal with sales-related contracts such as purchase orders, bills of sale, and warranties. You probably manage employment contracts such as employee agreements, independent contractor agreements, confidentiality agreements, and non-compete agreements, as well. Whatever types of contracts your business uses, it is essential that these contracts be written accurately and in a way that makes them legally enforceable. It is easy to make a mistake in a contract that changes the nature of the contract or renders it unusable.
Avoid These Pitfalls During the Creation of a Business Contract
There are many websites offering “do it yourself” templates for business contracts. While these templates may seem like an easy, cost-effective choice for contract drafting, contracts written in this way often miss the mark. A one-size-fits-all contract is not going to be personalized for your unique business needs and goals. A better option is to draft a contract that is specific to your situation. When creating business contracts, it is important to avoid classic mistakes such as:
Common Mistake #1: Ambiguity
It is essential that your contract is understandable, unambiguous, and contains the necessary information. You need to be especially sure that payment terms and other important elements of the contract are clearly defined. The contract should explicitly state the terms and conditions of the contract so that each party understands its rights and responsibilities.
Common Mistake #2: Superfluous Language and Legalese
There is no good reason to use overly complex or verbose language in business contracts. Sometimes, people assume that a contract filled with legal jargon appears more impressive than a contract that is simple and easy to understand, but this is not the case. In fact, unnecessary legalese will only make the contract more likely to be misinterpreted.
Common Mistake #3: Forgetting to Address the Contract’s Termination
A termination clause or rescission clause describes how a party will get out of the agreement. It may seem strange to plan for the possibility of an agreement turning sour, but failing to do so can cause a host of problems. The termination clause should include the terms under which a party can terminate the business relationship, the grace period for making the contract current, and the consequences of terminating the contract.
Common Mistake #4: Omitting Litigation Provisions
A solid business contract should include an agreement regarding how to address any disputes that arise between the parties. You might decide that disputes must be handled in arbitration, or that court action is possible. The contract should also specify the laws that will govern any disputes and whether a party will be liable for court costs or attorney’s fees in the event of a breach of contract.
We Are Here to Help
For trustworthy legal advice and skilled representation with any business contract concern, contact the team here at the Gierach Law Firm. Schedule a confidential consultation with one of our experienced Hoffman Estates business contracts attorneys by calling our office at 630-756-1160.today.