Even if a business contract is legally airtight, it can still be the cause of a messy dispute. In a perfect world, business contracts would always be 100 percent beneficial and satisfactory to every party involved. As most business owners know, this is not usually the case.
One of the best ways to avoid contract disputes is to circumvent them altogether by drafting a contract that addresses any possible disagreements head-on. A poorly written contract is rife with potential for litigation. The next time you are drafting a business contract, the following strategies can help you avoid potential disputes.
Plan for the future
Your contract may be designed to address your present needs, but you should also consider any variables that may arise in the future. Consider whether the contract will be renewed automatically or renegotiated every year, whether there are any circumstances that could render the contract void and what may happen if one of the parties goes out of business.
Have it notarized
A notary’s signature does not necessarily make a document legal, but it can help ensures that the contract is enforcable. Insisting on notarizing the contract may encourage the signee to read it thoroughly, preventing problems in the future. Say that a dispute does arise and proceeds to court: If the counterparty tries to claim ignorance of the document, the notary’s signature provides evidence to the contrary.
Exercise due diligence
Always exercise due diligence when it comes to a counterparty’s legal standing when it comes to signing a contract. If a party is not who they claim to be, any documents that they sign could be rendered null and void. Carefully evaluate the legal and professional capabilities of a potential signee before entering a business arrangement with them.
Consider budget and costs
Two common causes of contract disputes are budget and cost. That’s why it is absolutely crucial to determine a budget, decide who is responsible for costs, and incorporate these details into the contract. Although this tip seems obvious, numerous seemingly sound contracts regarding money have made their way to trial. To avoid litigation, make sure the financial details are etched in stone.