10 Legal Tips for Better Business Contracts

Small business owners frequently sign contracts with employees, vendors, banks and contractors. It is important to make sure your contracts are enforceable in a court of law and are free of potential surprises. One of the greatest challenges LegalShield provider attorneys face is attempting to resolve problems with a contract that has already been signed. Have your LegalShield provider law firm review any new contract before you sign.

1. Verbal Agreements — Verbal agreements are difficult to enforce. In addition, each side can have their own interpretation of what was discussed. It is vital that any agreement you enter into on behalf of your business involves a signed written contract.

2. Check for Errors — Make sure all of the names, titles and addresses in the contract are correct. Even simple clerical errors could hinder your ability to enforce a contract.

3. Keep it Simple and Concise — Keep contract language simple and unambiguous. Confusing language and legalese results in uncertainty. Business contracts should be easy for both parties to read and understand. An attorney shouldn’t have to translate the meaning.

4. Payments — Your contract should be specific about monetary transactions. When are payments due, who should be paid and how much or what percentage? Set deadlines and penalties for late payment.

5. Confidentiality — It may be necessary to include a confidentiality clause in your contract, particularly if the other party will have access to privileged information. Losing important trade secrets or compromising client data can be costly. Talk to your LegalShield provider law firm if you have questions about confidentiality.

6. Determine Jurisdiction — If the various parties entering into a contract are located in different states you should indicate which state’s laws will govern the contract. Indicating where the contract will be enforced will help avoid a dispute about jurisdiction should court action be needed. State laws may differ so it is important to consult with your LegalShield provider attorney.

7. Dispute Resolution — Include in your contract rules for settling any disputes that may arise between the parties. Negotiation, mediation and arbitration may help you avoid court should a conflict arise.

8. Termination — Set the terms for terminating the contract. You may consider including failure to make payment or meet specific deadlines as a cause to terminate the contract. Setting specific terms and guidelines for termination is an important way to avoid disputes and confusion.

9. Attorney Review — As a LegalShield small business member you have access to attorneys who can review your contract and point out potential legal difficulties. Do not sign a contract until it has been reviewed by an attorney.

10. Notarize Signatures — Having all signatures witnessed by a notary protects the legitimacy of your contract. Should you need to go to court to enforce a contract and the signatures are not notarized, the other party may dispute their signatures authenticity. If so, you will need to authenticate the signature, which will delay the legal process and increase costs.