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4 Common Mistakes Made When Drafting Business Contracts

On Behalf of | Feb 20, 2023 | Business Law

Your business contracts make a huge difference to your operations. Unfortunately, you may take for granted that a written agreement will protect you from a breach of contract or other forms of misconduct.

Business owners and other professionals sometimes learn the hard way that not everyone respects contracts and upholds them the way that they should. If you avoid the common contract mistakes below, it will be much easier for you to enforce your contract if there is a problem later.

1. Accepting boilerplate documents

The internet has made it easier than ever before for someone to quickly put together a contract using someone else’s language. Boilerplate documents are easily accessible and typically cost-effective, if not free. However, there’s a reason people say you get what you pay for. You need very clear, thorough contracts that address your specific needs and circumstances, if you want to uphold those agreements in court later or better yet, hopefully, avoid disputes altogether.

2. Assuming more is better

Including appropriate levels of detail in your contract is crucial for your company’s protection, but you don’t need to have endless technical clauses included in every contract. The more streamlined and direct a contract is, the less likely there is to be confusion about its true meaning. The best contracts are clear and unambiguous.

3. Failing to address confidentiality

In many scenarios, businesses prefer not to make their private dealings public knowledge. If you expect the other party to keep the terms of your agreement confidential, you will need to explicitly state as much in the contract. Without a confidentiality clause, the other party could potentially publish information on your dealings.

4. Using ambiguous terms for contract changes

Some businesses fail to address the potential need for changes to an agreement within their contracts. Others only vaguely touch on the issue without fully explaining the proper process. Your contract should include specific, direct language that explains the steps necessary to modify the agreement.

It is typically also beneficial to include a clause that addresses conflict resolution. Agreeing to attempt alternative dispute resolution systems before going to court can sometimes benefit both parties.

Having the right support when creating new contracts or attempting to resolve a breach of contract situation will increase your chances of success.