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How can you avoid liabilities in your contracts?

On Behalf of | Nov 2, 2020 | Firm News

A bad contract can ruin a deal. A good contract can lock in a solid business deal and secure your rights to property, money or services. How you draft the contract can determine whether the contract will be a liability or an asset.

Forbes suggests ways to draft a contract to avoid liability in the future.

Draft an appropriate and legal agreement

When drafting a contract, your company has to pay attention to the letter of the law. Even if you construct a precise contract, if you do not follow the law, then the contract loses all validity. You should draft the contract professionally. Show that you understand the rules and formality of a contract. Do not rely on verbal contracts or contracts through text messages.

Create a mutually beneficial agreement

While you do want business agreements to benefit your company, you do not want to create one-sided agreements. Selfish agreements backfire because your company appears selfish and your terms may look unconscionable. If you end up in court because of a dispute, the judge may not take your side because the terms appear outrageous. Instead, the contract may free the other party from its obligations.

Whittle down the clutter in your agreement

Do not overstuff your contract with provisions for every possible risk to the point that you alienate the other company. If you do not prioritize what your company needs, you could lose it all because you refused to let go of the little things. Be strategic when negotiating. Keep your document as brief as possible. Keep all the important provisions in the agreement and avoid unnecessary provisions.