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Just as you can count on death and taxes, if you run a business, then you will definitely need to enter into business contracts. Even if you are a savvy and veteran business owner with years of experience, then contracts often evolve and vary depending on the subject matter. Further, the advance of technology is adding new wrinkles to contracts.
You will need to familiarize yourself with significant aspects and terms for most contracts. The terms of every contract should be clearly defined and should have provisions that are not obtuse. There is a movement in the legal community to use more common sense language and away from too much ‘legalese’, but with that being said, you should not allow the terms of any contract to be ambiguous. Otherwise, you run the risk of opening a loophole that might cause the contract to be vulnerable to expensive litigation, or even unenforceable.
Generally speaking, most contracts have about half a dozen flashpoints concerning the parties, terms, timeframe, scope, money, obligations and remedies. The remaining provisions typically address the unique subject matter for that particular contract.
You will gain an advantage if you have your own business attorney to draft the contract. If not, then make sure that you take all the time you need to thoroughly read the contract multiple times and understand all of the provisions. Do not sign a contract at a meeting after having been handed the contract. Rushing is a recipe for mistakes and regret. If the other party pressures you to sign a contract in such a manner, then they usually have a reason for the ‘urgency’ that is rarely in your best interest. Don’t be afraid to say ‘no’ and insist upon time to properly review the contract.
When you have some quality time, review the agreement and check things you do not understand. Read the contract at least twice. After you have read it, spend time going over it with the other party and make them clearly answer any of your questions. Make sure all your important points are in writing in the contract. Verbal assurances are meaningless and are many times unenforceable. Contracts can be edited and rewritten. Why is this so important? You obviously want to protect yourself, but another reason for making sure the contract is detailed is to avoid any misunderstandings that may cause a dispute in the future.
One of the biggest mistakes parties make in a contract negotiation is making an assumption. Do not assume anything. Go to great lengths to understand the definitions specified in a contract. When in doubt, consult your attorney. A contract usually includes boilerplate language that an attorney can interpret for you.
The Internet age has also brought new wrinkles to contracts. Today, many contracts include terms like ‘media,’ the ‘universe,’ ‘electronically,’ and phrases like ‘from the beginning of time, across the universe and for all perpetuity.’ Expect to see more contracts with this kind of verbiage in the future, even in routine contracts like rental/lease agreements. The Internet, Social Media and rapidly advancing technology are redefining our notion of many things.
If you encounter language like that in a contract, then you should seek the guidance of legal counsel. Not only should you not sign it, but you should also take great pains to understand what the terms mean relative to this language. For example, you might find yourself inadvertently signing away your intellectual property rights or mineral rights.
Of course, contracts made with persons under the age 18 are usually invalid. Most states have a Consumer Fraud Act as a remedy for illegal or harsh contracts.
The Metcalf Adair Law Firm offers experienced business counsel and can assist you with your contract negotiation, preparation and review needs. To learn more about the preparation and review of contracts, or how we may assist you in a related matter, contact us today to schedule a consultation.