If you’re a business owner, chances are you’ve had to deal with a contract or two during your entrepreneurial tenure.
Whether your asked to provide a contract for services or given a distribution contract for your review by another party, its crucial that you get legal assistance before proceeding.
Despite what many may think, contracts are not all the same, with the same boilerplate language. Overlooking key details can lead to costly legal disputes. Avoiding common drafting mistakes is essential for protecting the interests of all parties involved.
Here are some common pitfalls to steer clear of when it comes to commercial contracts:
1. Ambiguous Language: One of the most frequent errors in contract drafting is the use of vague or ambiguous language. Unclear terms can lead to disagreements and legal battles. To ensure clarity, contracts should use precise language that leaves no room for interpretation. Don’t forget, it’s a contract and not a mystery novel – so we don’t want any future surprises!
2. Inadequate Scope of Work: Contracts often fail when they lack a thorough description of the scope of work, or the goods and services involved. Without a clear explanation of responsibilities, both parties may have different expectations, leading to disputes. Clearly outline the scope, deadlines, and deliverables to avoid misunderstandings down the road.
3. Ignoring Governing Law: Every contract should clearly state the governing law that will apply in case of a dispute. Failing to specify the jurisdiction can result in uncertainty about which laws apply, possibly leading to lengthy legal battles.
4. Forgetting Termination Provisions: Contracts should include well-defined termination clauses setting out the circumstances under which either party can end the agreement. Failing to include a termination clause is a classic blunder. It’s the escape hatch, the emergency exit, the clause that gracefully allows parties to part ways when the business tango turns into a solo waltz.
Contracts of any kind require careful attention to detail, and the above are just a few examples of contract mistakes. Remember, your contract is your shield in the business battlefield. Avoid these pitfalls, embrace clarity, and (most importantly) get legal advice.
Robin K. Mann, Associate Lawyer