Why Do I Need a Written Contract?
Anytime you enter into any business arrangement it is a good idea to have a business lawyer help you draw up or review a written contract. An oral agreement is subject to future differing and competing recollections, is difficult to prove, and sometimes legally unenforceable, so it makes sense to memorialize the agreement in writing. While you may think you are saving money by agreeing to a verbal arrangement or writing your own contract, those options could end up costing you dearly in the long run. With an oral agreement, misconceptions as to what has been agreed upon are not uncommon. However, with a written contract the arrangement is memorialized so that each party can review it before signing to ensure they fully understand the terms of the agreement and, once signed, can refer to it in the event of a future dispute.
Here are a few (but not all) specific reasons to have a business attorney draw up a formal written contract for you.
Spell Out the Terms
When engaging in any type of business relationship it is important to be specific in detailing the obligations of each party. This provides clarity and certainty as to what party is to fulfill which obligations. A well drafted contract that has been drawn up by an experienced lawyer should, among other things, establish payment obligations, the precise services to be rendered or the goods to be provided, and the timing of when all obligations under the contract are to be fulfilled.
Additional Details to Address
In addition, a written agreement should contain, among other things, any representations or warranties that each party is making to the other, specify how any notices required under the contract are to be given, explain whether there are any confidentiality restrictions, address ownership rights, define what the remedies are for breach of the agreement, and spell out how any disputes are to be resolved. Of course, there are other important terms to be considered when discussing the contract with your attorney.
The Importance of Confidentiality
Your business may have documents and other information which will be provided to the other side during the course of the business relationship that are confidential and/or proprietary and need to be kept private from competitors and others. Even the terms of the contract itself may need to be kept confidential. A well drafted agreement will help you maintain and enforce confidentiality by containing provisions that specifically address this important issue. Among other things, such clauses in a contract help ensure that when you enter into a business arrangement your business information will be kept confidential.
When Disputes Arise
Although all business arrangements are entered into with the hope and anticipation that they will be performed without any disputes occurring, the reality is that conflicts do arise. In the event of a dispute with your contract partner over performance of the contract’s terms, a well drafted agreement should spell out how such disputes are handled and resolved. There are various options to be considered when addressing this issue including whether to specify mediation, arbitration or litigation (or some combination of them) as the method for resolving disputes. In addition, what law should be applied to any disputes and the location of where disputes will be resolved are further important considerations to be addressed with your attorney, among others, when drafting a contract.
Having a well thought-out and well drafted contract is a perfect example of “an ounce of prevention is worth a pound of cure.” If you do need to enter into a business arrangement, contact Kravet & Vogel. Their experienced legal team can help you draft a contract that will address the issues that matter most to you and help you protect your business and legal interests not just today but in the future as well.