Contract management and contract processes aren't the sexiest topic but are super important in helping to protect your business and yourself. As important as contracts are throughout the world based on mutual interaction, they remain a complex and confusing part of business. A variety of myths still surround contracts, which can impact how you do business and protected your business is. Make sure you know the facts and can sift through the fiction surrounding your contracts.
Top 10 Myths about Business Contracts
It's time to set the record straight on the 10 myths about business contracts that persist. Whether we like it or not, contracts are an essential component to daily life, whether signing new employees, started a new business relationship, or joining a new phone service. We are constantly signing contracts without looking at the fine print.
While we may accept this in daily life, in business, this kind of informality can hurt you. The following information busts the most common myths about business contracts you may come across or even unknowingly believe.
1. An Attorney is too expensive
The first common myth is that getting a lawyer to draw up new contracts is too expensive. Hiring an expert in their field will always cost money because you are paying for their proven experience. Just like you wouldn't trust someone without experience fixing a jet engine, you shouldn't trust someone without experience formulating your contracts. In the end, hiring an attorney is not too expensive for your business contracts but not hiring an attorney to draft or review your contracts could cost you the most.
2. You don't need a contract
Few people and even fewer businesses want to spend money unnecessarily but contracts are not arbitrary or a waste of expenses. If you fall into the belief that if nothing has gone wrong, nothing will go wrong, then you will more than likely find how quickly a good business can fail when something does go wrong and there is no contract in place. Whether another party tries to terminate your agreement early or isn't performing to the standard at which you agreed, without a firm contract that determines these types of situations ahead of time, you may struggle to find a solution.
The most important question to ask yourself when considering whether you need a contract is, "What am I risking if I do not have one vs. if I do?" From long-term arrangements to short term deals with a high value, ta robust contract can protect your business, your investments, and you.
3. A contract is only valid if its signed
Not all contracts are valid only if signed. Some contracts are verbal and examples of contracts based on handshakes exist in business as well. The key to a verbal contract or a contract validated with a handshake is based on the necessity of proof. When business relationships agree to begin a process, whether with a physical gesture or validating response, such as a handshake or verbal “yes,' your contract may begin.
4. Context can help explain the conflict
The most important aspect of a contract, even in a dispute, is the text on the form. This means, a judge will not take into account any argument outside of what exists on the paper no matter how hard you try to bring up what took place before the contract was signed or the terms the parties had discussed before signing the contracts. It is up to you and your attorney to ensure all terms you agreed to are included in the contract before signing.
5. A “standard” contract exists
One of the biggest myths of business contracts is the “standard contract,” which is meant to act like a one-size-fits-all contract that can encompass all contingencies. Every contract is different and should be because every transaction is different. While you may create similar business relationships or connections, the terms of goods and services must change, as well as deliverables, or protected ideas in order to create a sound contract.
It is easy to believe a contract may fit your particular need but without the help of an experienced attorney, you may find fall prey to uneven terms, unfair practices, or procedures irrelevant to your business. There is not template that fits all contingencies. Contracts is an area where you cannot “fake it, ‘til you make it.” Contracts are meant to serve your goals and your needs. If you do not take the time to ensure they conform to those concepts, they will not help you now and will most likely hurt you in the future.
6. Agreed terms are binding
A signed contract does not necessarily bind you to the agreement. Each case is specific to the details but in certain circumstances, even if you agree to the contract terms, you may not be bound to terms the court refuses to uphold. For example, courts often ignore “no-oral-modification” clauses. One reason for this is because oral agreements can be considered binding. By agreeing orally, a modification outside of the contract, it can still be considered a binding change even with the clause on the contract.
Other times the court may not uphold a contract is when the contract is attempting to circumvent certain rights. Again, every case has its own set of circumstances but you never know if your contract is binding or not until you consult with an expert attorney to explore any and every option.
7. All contracts are fair
One of the biggest myths inside and outside of business is the idea that contracts are fair. Contracts are rarely fair. The purpose of a contract is to ensure each party has their goals and needs legally met but that does not mean a contract is written with this intent. In a perfect world, contracts wouldn't even be necessary but in an imperfect world, contracts help ensure fairness.
If you do not review the documents before signing, you are not protecting your investment, time, assets, company, or yourself. The only way to make sure the contract is fair is to have an expert lawyer review your contract before you sign. They understand how to interpret the fine print, breakdown complex issues, explain obligations, or explore areas in need of added language to protect your rights and meet your needs.
Contracts sound simple on the surface but in fact represent a complex set of rules. An expert attorney can help draft, refine, and review your contracts in order to serve your needs. Contact I.Donald Weissman for your free consultation and find out how to cover your contract needs to meet your business goals. You can also checkout the Weissman Law Firm's Business Contract Prepare Kits to learn more about how you can protect your business moving forward.