Strong, efficient contracts form the foundation of any successful business. Unfortunately, in their haste to either finalize a deal or build an agreement from the ground up, it is not uncommon for business owners to make errors that could jeopardize the validity of the contract leading to breaches or litigation.
Common pitfalls that many businesses face during the contract management process can include:
- Using vague language: A contract must be written based on clear, precise language. Too often, an organization will rely on vague wording or unclear definitions to protect their position. Unfortunately, this can work against them as the contract might be invalidated or challenged by the other party.
- Failure to clarify goals: The organization must write a contract that specifically discusses the scope of the project and each party’s goals. While the initial scope of a project might change over time, these amendments must be made to the contract rather than using vague language and unclear wording.
- Failure to specify consequences: Even if the contract is written clearly, the business owner might leave out crucial details that specify consequences for failure to satisfy the terms of the agreement. Failing to meet a deadline, for example, or delivering an incomplete shipment should have specific consequences attached.
Business contracts can cover a broad range of topics from vendor agreements and employment contracts to partnership agreements and lease agreements. Additionally, an organization will likely need to draft restrictive covenants to protect their trade secrets or intellectual property. Nondisclosure agreements and non-compete clauses must be carefully crafted to not only protect the business but avoid being so restrictive as to invalidate the contract. It is wise to work with an experienced business law attorney who can provide the guidance and insight you need.