Without sound business contracts in place, your business relations with contractors, vendors, and customers will stay in a constant state of turmoil. Although there are basic contracts available, drafting your own contracts helps to ensure that the documents fully protect you and your business. Here are mistakes you should avoid when drafting the contracts.
Failing to Research Your Needs
Your starting point for the contracts needs to be researching the needs of your business and special challenges you could face. For instance, if you are contracting with food vendors, you need to know what contractual issues have come up in the past that have led to litigation.
By knowing these issues, you can ensure that there are provisions within your contract to help you avoid the courtroom. For instance, if a vendor has a history of suing business partners, you can find out why the lawsuits typically originate so you can cover those areas in your contract.
Failing to Include a Termination Clause
Although it is important to include what is expected of each party that is signing the contract, you also need to include consequences if any part of the contract is breached. For instance, if the vendor fails to deliver the product on time, you need to decide what it will take to make it right.
In the event that you or the other party are unable to fulfill the terms of the contract or you simply want out of it, you also need to include a termination clause. The clause will give you a way to exit the relationship without being subjected to heavy penalties and other consequences.
Failing to Include Methods for Resolving Disputes
Even with a well-written contract and clearly outlined consequences for breaches, there is still a possibility that there will be some disagreement that is outside of the contract. If that occurs and there is no clear cut path for resolving the dispute outlined in the contract, you could face a lawsuit.
To avoid this, be sure to include an outline for resolving disputes in the contract. For instance, your contract could call for both parties to attend arbitration. Remember, if you opt for arbitration, mediation, or any other method that has legal fees attached to it, you need to include language dictating who will pay for those services.
Mistakes in your contract could leave your business without real protection from litigation. To avoid mistakes, work with an experienced attorney like Carter West Law firm who has experience in business law and contracts.