The 5 Biggest Mistakes Made In Business Contracts
Contracts are one of the unavoidable, core parts of doing business across all industries. Every business deals with contracts in order to make their venture successful. Often, companies make mistakes when it comes to creating, considering, or even approving a business contract. Doing so could cause catastrophic ramifications and this is something that you want to avoid. By knowing what the common mistakes are and how to avoid them, you are taking away the stress of trying to fix errors made in the contract process.
Mistake #1: Using Contract Forms That Are Ready-Made Over the Internet
Drawing up a contract can be tedious work – which is why some owners or managers will look to the internet for a solution. Unfortunately, trying to find and use a one size fits all contract online isn’t going to work due to several reasons. One being that a contract must be relevant to where you are located, and two being that relying entirely on boilerplate templates can get you into trouble later. States’ laws vary and as such, you must review language in the contract that may conflict with the parameters of your state and industry.
Mistake #2: Getting Legal Advice After Signing a Contract
Signing a contract before having a lawyer take a look at it is a poor idea. Even if the deal you’re drawing a contract up for is seemingly standard, you still don’t want to wait to ensure you and your business are protected. Ensure either a lawyer or contract specialist that has experience in business contracts thoroughly reviews before you sign it. This is to ensure that you are protected and that all of your terms are honored by the language of the contract.
Mistake #3: Not Remembering the Recitals
A recital is the preamble to the contract. A recital outlines the parties, the reason for the contract, and why the parties are signing the contract. Forgetting the recitals could turn disastrous during a dispute and could end up being unfavorable for you when a case is presented in front of a judge. Remember that a recital is important in the contracting process to avoid any legal trouble moving forward.
Mistake #4: Being Unaware of What Clauses Should Be in The Contract
By not knowing the standard clauses that should be in a contract, you are laying the foundation of disaster for yourself in the future. You want items such as an assignment clause in a commercial contract. Items like these can be determined by a lawyer or contract specialist, so always seek legal advice before moving forward.
Mistake #5: Being Too Vague In Your Contract
Contracts can often have obscure and vague words that aren’t specific enough to make any sort of real statement. Words should have clear definitions to them. Don’t fill your contracts with ambiguous words that can be disputed further down the road. State clearly what you wish the guidelines to be in your contract to avoid legal and financial problems.
Every mistake listed here can be avoided with the help of a contracts specialist team. Concannon specializes in business consulting and can assist in putting together any contract that will benefit you and help protect your business, your employees, and your financial well-being.