Does having a good contract in place mean the end to business disagreements? No. However, it might make them less likely to occur. At the very least, a strong contract will set out ways to handle disagreements. It’s important to your business to create and encourage strong business relationships. Contracts are a great place to start.
So, what makes a contract ‘good?’
Complete and Unambiguous
Contracts memorialize terms and conditions agreed upon by all the parties involved. When details are omitted or are couched in vague terms, disagreements arise. While some industries, like real estate, may use standard form contracts, others must rely on contracts drafted for their specific situation.
The contract’s language should be clear and unambiguous, even the fine print. The party responsible for drafting the contract may be held accountable for differences of opinion that arise. However, all parties are responsible for understanding the contract before signing it.
When involved in business negotiations, ask questions and point out omissions or vague language in your contracts. What seems like a simple error could lead to complications later on.
Legal and Enforceable
All contracts must be legally enforceable. This means the form and language will comply with statutes or common law. Keep in mind that Minnesota law does consider verbal contracts to be legal and enforceable. However, it is usually best to get agreements in writing.
Contracts involve one party making an offer, which is accepted by the other party for consideration. All the parties must freely agree to the contract without being under duress. Also, all parties must be competent to understand and agree to the contract.
Contracts typically include provisions to help the parties handle future disagreements.
For example, the contract may contain provisions stating what court will handle lawsuits arising from disagreements. Dispute resolution provisions may also call for alternative solutions such as mediation or arbitration.
Often a force majeure provision is included. This provides the parties with guidance on how to handle events that cause unavoidable delays in contract performance. Remedies may include suspending the contract for a time or terminating the contract with little or no penalty.
Will Your Contracts Make or Break Your Business Relationships?
It doesn’t matter if you’re signing an employment agreement or a multi-million dollar purchase agreement. Contracts matter. Have your contracts drafted and reviewed by an attorney.
The lawyers at Virtus Law offer business advice based on years of experience. Contact us by calling 612.888.1000 or by emailing us at email@example.com. Our main office is in Minneapolis, with other offices located in Maplewood, Cambridge, Edina, Mendota Heights, and Red Wing.