Contracts are fundamental to the operations of a business and set out the reciprocal promises made between parties to a commercial transaction. It is virtually impossible to do business without some type of a business contract.
Over time, your business needs are likely to grow, and a range of negotiations and transactions will take place that should be documented in a legally binding agreement. These might include contracts for the provision of goods and services, terms of trade, employment contracts, partnership, agency, licensing, and distribution agreements.
While it can be tempting to take a ‘do-it-yourself’ approach to your business contracts, can you really afford to? The reality of the modern business world is that a poorly drafted contract may cost you money in the long run.
Beware the home-made contract
Like it or not, our world has become more complicated than when agreements were made with a ‘hand-shake’ or by penning a few words on paper. At some stage, most commercial lawyers would have helped anxious clients involved in disputes where a contract has gone wrong, or a deal has become messy because of an incomplete or non-existent contract. Numerous court reports have lengthy judgements interpreting ambiguous contract terms – all a costly and draining exercise for the parties.
Home-made or DIY business contracts may appear to represent value for money but are unlikely to be tailored to your individual business and personal needs. Online business contracts may exclude terms to cover a range of contingencies or be unsuitable for the subject matter, jurisdiction or industry in which your business operates.
Involving a lawyer to prepare or review a business contract will help keep negotiations on track and ensure that your personal and business interests are protected. A lawyer can draft a contract from scratch or tweak an existing contract to fill in the blanks and flag issues that could otherwise prove costly.
Surprisingly, the correct identification of the parties to a contract is something that can be overlooked. While it’s obvious that you need to know who you are dealing with, the real identity of a party is not always so, particularly in a commercial context. Certain investigations can confirm the individuals behind a business or company name and may show if a company is undergoing administration at the time of searching. Similarly, there are specific searches that can be carried out to discover whether there are any encumbrances over certain property that is the subject of a contract.
The ideal time to take advice from a lawyer is before entering into a contract. However, if you have already signed a DIY contract, a lawyer may be able to assist by explaining your legal rights, discussing your options, and recommending steps to minimise any potential loss.
If you or someone you know wants more information or needs help or advice, please contact us on 1800 618 869 or email [email protected].