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What are some common mistakes in business contracts?

What are some common mistakes in business contracts?

Detroit area businesses enter into contracts with many different entities. These contracts are an important part of doing business. But one badly constructed contract can have the power to negatively affect a company. It is important for business owners to keep in mind business contract mistakes and recognize them in their own contracts.

Not having a contract

It is a mistake for a business to not have a contract and to rely on a promise. It is important that a business is protected in the event that something goes wrong. Well-written contracts prepare a business for uncertainties and allow the business to move forward regardless.

Not considering what constitutes a breach of contract

A business needs to consider what would end a business relationship. Whether it be not paying, not delivering the product, not the right quality, etc.

A way for either party to end the contract

Many contracts only allow for termination in the event of a breach of contract. They should also include a way for both parties to exit the contract.

Dispute resolution

If a dispute arises out of a business contract a contract should state how the dispute will be handled. Mediation is often a good first start in a dispute followed by arbitration and then litigation.

How does the contract relate to other contracts

If a company has other contracts with the same business partner they should make note of that. The new contract may say that this agreement supersedes all other agreements, whether oral or written.

A legal professional who specializes in business law matters can help their client draft a contract that is beneficial and appropriate for their client and protects their business. They can also review contracts and help with contract disputes if they arise. Having a legal professional who is skilled in business law can be invaluable for any business in the Detroit area.