It may come as a surprise, but contract law plays a vital role in daily life for everybody. Even a simple matter such as making a purchase from a shop consists of a contractual agreement.
However, business owners tend to be far more aware of the importance that contractual obligations play in daily activities. Sound contractual agreements can significantly bolster the financial success of corporations.
As a result, it is important to examine some of the common mistakes that repeatedly occur in flawed business agreements. Outlined below are three common pitfalls to avoid when drafting business contracts.
Wording that is unnecessarily complicated
Contracts can often be lengthy and overwhelming at first glance. However, an overly complicated contract is not necessarily in your favor. Contractual terms that are difficult to understand can be easily misinterpreted. The functionality of a contract is far more important than its apparent complexity. In fact, it may be more helpful to have contractual terms that are clear, concise and accessible to the general reader.
Omitting ways to end the agreement
Although the intentions of all parties may initially be to bring about a lasting agreement, it is still important to address how a party might get out of the agreement. Not having the means to terminate a contract can result in lengthy and complex legal disputes.
Not having instructions on dispute resolution
Even if a disagreement arises between parties, this does not necessarily mean that the contract must come to an end. Placing dispute resolution methods within the contractual terms could prevent the ending of a business partnership that had once been extremely profitable.
Sound contracts are pivotal to the profitability of a business. As a business owner, it is important to remember that you have legal protections when faced with a contractual dispute.