Contracts are fundamental to business operations. They set out the reciprocal promises between parties in a commercial transaction. Businesses almost always rely on contracts to operate.
Over time, your business will grow. You will enter into negotiations and transactions that require legal documentation. These agreements should be recorded in a legally binding contract.
These may include:
- contracts for goods and services
- terms of trade
- employment contracts
- partnership agreements
- agency agreements
- licensing agreements
- distribution agreements
Many businesses consider a ‘do-it-yourself’ approach to contracts. However, this approach carries risk. A poorly drafted contract can result in financial loss over time.
Beware of home-made contracts
Modern business is more complex than handshake agreements or handwritten terms. Most commercial lawyers deal with disputes that arise from unclear or incomplete contracts.
Courts often interpret ambiguous contract terms. These disputes take time, cost money, and place pressure on all parties involved.
Home-made or DIY contracts may appear cost-effective. However, they rarely reflect the specific needs of a business.
Online templates also present risks. They often exclude important clauses or fail to suit the industry, jurisdiction, or type of transaction.
Why legal advice matters
A lawyer can prepare or review a business contract. This helps keep negotiations clear and structured.
A lawyer can also:
- draft a contract from scratch
- review and adjust existing contracts
- identify missing or risky clauses
- protect your personal and business interests
One commonly overlooked issue is the correct identification of the parties. Many people assume this is always clear. In practice, it often is not.
Legal investigations can confirm who controls a business or company. These checks can also reveal whether a company is in administration.
Additional searches can identify encumbrances over property involved in a contract. These issues can significantly affect commercial risk.
When to seek legal advice
The best time to seek legal advice is before signing a contract. Early advice helps prevent disputes and reduces risk.
If you have already signed a DIY contract, a lawyer can still assist. A lawyer can explain your legal rights and outline available options.
A lawyer can also recommend steps to reduce potential financial loss.
Conclusion
Contracts play a critical role in protecting your business. Poorly drafted agreements can create significant legal and financial risk.
If you or someone you know wants more information or needs help or advice, please contact us on 07 5576 9999 or email [email protected].
