Contract negotiations can be long, complicated, and—we will admit—pretty dull. However, contracts are also legally binding and essential to your business. Accordingly, business owners must understand how to draft beneficial contracts and how an experienced business lawyer can help.
Types of Business Contracts
Different businesses need different kinds of contracts to operate successfully. These contracts might include the following:
- Sales contracts
- Employment contracts
- Insurance contracts
- Confidentiality agreements
- Vendor contracts
Drafting and Reviewing Business Contracts
Written contracts are essential to running a business. A written contract documents the terms, conditions, and obligations of each party to the contract. An experienced contract attorney can identify your goals and draft an agreement that meets them. For a contract to be legally binding, there must be a mutual agreement between the parties, and the document must include:
- Clear identification of parties and an indication that each party has the legal capacity to enter a contract
- An offer
- Acceptance of the offer
- Consideration (typically money)
- Content that is legal to include in a contract. For example, you cannot enter a legally binding contract to commit murder or sell illegal drugs.
Depending on the unique nature of your contract, some of the terms and clauses your lawyer will consider include:
- Defining essential terms
- Identifying the rights and duties of each party
- Means for terminating the contract
- A clause that excuses parties from fulfilling contractual obligations when something happens that is beyond their control. For example, the parties may be released from the contract for acts of nature or changes in government regulations.
- An arbitration clause, if contract disputes will be decided in arbitration rather than through litigation
- An indemnification clause that requires a party that breaches the contract to compensate the other party
- An assignment clause that indicates whether either party may delegate its contractual obligations to someone else and whether such an assignment requires prior notification or consent by all parties to the contract
- A confidentiality clause that prevents parties from sharing certain information with third parties
- Warranty clauses in which one or both parties promise that certain facts are true
- Choice of law clause that indicates which state law governs the contract
- A time-is-of-the-essence clause. If a missed deadline could result in financial harm, then the contract may have a time-is-of-the-essence clause that requires the other party to fulfill its obligations on time.
- A severability clause that allows the rest of the contract to remain valid even if one part of the agreement is unenforceable
- A liquidated damages clause that explains the kinds of damages that must be paid if the contract is breached.
Often, negotiations occur between the first and final drafts of a contract.
Sometimes, you are not in a position to create a contract. Instead, you are provided with a contract by another party. You can still protect your rights by having a business attorney review the contract and recommend any necessary changes.
A Business Contract Lawyer Can Save You Money and Aggravation
Hiring a business lawyer now may save you considerable expense later. Our Virginia and Maryland business attorneys can help you:
- Avoid illegal or unfavorable contracts
- Fully understand your contractual terms and obligations. You don’t want to get caught by surprise and later learn of something you agreed to that does not benefit your business.
- Make sure that the contract reflects your intentions and suggest additional terms that may benefit your business
- Identify problems and help you decide what to do about them
- Prevent future breach-of-contract disputes