Contracts can be verbal, but typically they're going to be in writing so there’s no game of "he said, she said." They are legally binding for both parties. Contracts are legally enforceable agreements and when it comes to business, they can be made between owners, new employees, contractors, vendors, government bodies, financial institutions, and plenty of other people or organizations. Each contract is different and can be anywhere from just a page or two to hundreds.
Everyone knows the old adage “the Devil is in the details” and that’s exactly why businesses need an experienced lawyer on their side for legal advice. While you’re going to be drafting the most contracts towards the start of your large or small business, new contracts will constantly keep coming up. As a savvy business owner, you probably are aware that you should avoid picking apart contracts all on your own. And that’s smart — generally you want to avoid signing contracts without first having your legal counsel review them.
Once the contract is signed, you can’t simply back out of it easily. Often, a breach of contract ends with very expensive litigation, so it’s important to know exactly what you’re signing on for. These “gotcha” clauses are exactly the type of thing you need a legally trained eye to pick up on.
As a business owner, you may be thinking how expensive it is to hire a lawyer. It is true that legal work is generally pricey, but just think about how much more expensive a lawsuit could be down the road. They’re not something to mess around with, since they have bankrupted countless businesses. Besides, there are budget-friendly options and lawyers who charge based on package deals rather than with a standard hourly rate.
We draft contracts, review them, and offer you advice specific to your situation. Generally, we will also offer litigation as well, should anything go wrong and you have a dispute or breach of any contract you’ve signed onto.
If you’re still not convinced, here are some key reasons to get legal help for your business.
TRICKY WORDING. It’s called legalese for a reason — it may as well not be English! Words meant to trip you up at first glance are put there for that exact reason. Sometimes you read something and think it means something completely different. Lawyers know exactly the kinds of tricky words that are often put in contracts to make them hard to read.
CATCHING LOOPHOLES. Loopholes are “an ambiguity or omission in the text through which the intent of a statute, contract, or obligation may be evaded,” so they’re oftentimes things that are intentionally left out or worded strangely to add to confusion.
As a small business owner, you probably don’t have enough expertise and experience in law. Leave the legal issues to the experts. We have been trained and seen countless contracts over the years, so we know exactly the tricks other lawyers try to pull and can help protect you for your business needs. Everyone wants the contract to be in their favor, so when you’re handed a contract you need to be aware that the other party seeks to protect themselves. Not to imply that a partner or new vendor is necessarily malicious, rather they are simply ensuring things not work out that they are not left hanging.
VENUE OR FORUM SELECTION CLAUSES. Although in the digital age this is much less common, some parties may still try to slide a venue clause past you. This clause sets the physical location for any disputes to be resolved. While this may not seem harmful at the outset, it could obligate you to travel out of your way (perhaps with legal counsel as well) for a hearing. The cost of this could add up really quickly, thereby disincentivizing you from even doing it. Advice from a lawyer could avoid putting yourself in that position to begin with.
BETTER NEGOTIATING POSITION. If it’s just you against a lawyer negotiating the terms of a new deal, you’re up against a pro and might not have the upper hand. When making important business deals you want a level playing field, if not the advantage, to get the best terms. You might need someone who knows the ins and outs of contracts and who speaks legalese fluently. Ensuring both parties are satisfied with the deal will make for a stronger partnership and create a long-lasting relationship of trust. Start out with your new deal on an even keel and ensure your business thrives as a result.
PROTECT YOUR COMPANY AND EMPLOYEES. Poorly written contracts could put your company in a weak position and can put you and your team members in difficult situations. No one can tell the future, but having comprehensive contracts that cover a wide set of possibilities minimizes the risk for an unexpected curveball to derail your operation.
MONEY. When it comes down to it, hiring a lawyer will cost you. But not hiring one can really cost you down the road! A lawyer with experience in your industry will know what the customary contract terms are. A lawyer can offer advice on typical contract terms or write a contract that pushes the boundaries in your favor — potentially saving you thousands of dollars. There is no crystal ball, but the longer you stay in business and the bigger you grow, the higher the chances of something going wrong. Even if your company might be small and you may not think small mistakes can cost you much now, eventually you’ll hopefully grow and expand. Some of your early contracts may still be in effect and come back to bite you. Make sure you’ve prepared from the start.
PROJECT CONFIDENCE AND TRUST. Having everything done by the book, properly and with no funny business at the start establishes your business with a certain reputation — the good kind. Being a new business, you need to build confidence from the ground up and usually this starts with your first few key negotiations and contracts. Having a lawyer consulting on your end gives you that extra layer of credibility and professionalism to ensure your contractor, associates, and partnering organizations see you and your company as respectable. Later on, they will vouch for you. Word travels fast in business circles and a tarnished reputation is hard to live down.
OVERALL PIECE OF MIND. Running a business is hard enough as it is, why add extra worry to the matter? Don’t stress yourself out about every piece of paper to cross your desk. Contracts are hard and designed to be tricky. They’re made by the experts to be hard to understand intentionally. Don’t risk your business because your eyes glazed over on page 47 and missed a key phrase in one of the clauses. These kinds of things can come back to hurt you, so why chance it?
You are not an expert at contract interpretation or law, so contracts are probably not something you particularly enjoy reading through for hours and hours. You want to make sure you’re getting a fair deal and that you aren’t falling prey to some of the traps that are sometimes found in standard contracts. You definitely want to be reading all the contracts you sign, but make sure to have a contract attorney review it as well.
As we’ve mentioned before, being in breach of a contract is not great and can end up with very serious consequences. Depending on the wording, you may be tied up in court for years or even end up with a penalty so large it puts you out of business. When you’re getting into an agreement, make sure you know exactly what you’re signing on to. Not every clause is going to be 100% to your liking, but as long as you understand what you’re getting into you can generally avoid the headaches that come with contract surprises down the road.
If you're a small business owner and have questions about your business's contracts, give us a call at 253.858.5434 to set up an appointment today.