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Contracts Contracts are vital to running your business, but I’m not talking about having a legal sledgehammer against the other party. The biggest reason you need a contract is to make sure that you and the other party are in agreement to what each side is to do. Most contract disputes arise because the parties rushed into the deal and did not specify each other’s duties and responsibilities. They don’t discover the problems until money, time, product, and other costly mistakes have been made. Contracts also allow you to impose specific terms on the other party, such as charging interest on late payments, collecting attorneys’ fees if a lawsuit is needed, and determining where a lawsuit must be filed. While these terms may seem unimportant compared to the terms of the deal (which is the reason why you’re entering into the contract), these are the provisions which can make or break you in a dispute. Do You Need A Contract? 1. Why bother with a contract? • You put a lot of time and effort into your business, you should know your obligations and rights • You don’t know exactly how the party you’re getting into business with conducts itself, and whether it will do the right thing if difficulties arise 2. Who is supposed to do what? • Good contracts clearly define exactly what each party is responsible for, when it is to occur, and what happens if it does not occur • This is the reason most lawsuits are filed regarding contracts – the parties did not take the time BEFORE conducting business to determine what was actually required of each side • DON’T ASSUME ANYTHING – your industry’s standard of practice may be entirely different from the other party’s practices 3. How are you going to get paid? • Many business dealings have periodic payments, draws, or some other compensation schedule • People who assume that standard industry practice applies to their deal may be in for a rude awakening if they have to go to court to collect on an unfinished job • Be sure clear, defined criteria are in place for when payment should be made 4. Who owns the finished product? • DO NOT assume that just because you paid for a produce (software, logo, article, artwork, etc.) that you now own it. You probably don’t. • ALWAYS define who owns the finished product, including all patents, copyrights, trademarks, etc. 5. What happens if things go bad? • Damages and remedies provisions can give you options which the court can’t • Liability limitations can limit your exposure and lessen your risk 6. What about attorneys’ fees? • You must have a written attorneys’ fee provision or you can’t collect them in court If you have any questions about contracts, please contact us at 623-298-4220 or email us.mailto:Info@BuschLawCenter.com?subject=Contract%20Info,%20pleaseshapeimage_5_link_0
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