It is part of the operation of most businesses to become involved in contract negotiation. Even if you are in a type of business where contracts are not utilized for customers or clients, it is inevitable that when purchasing products or services you will be presented with a written contract. Of course, the business owner can certainly review a simple contract without assistance, but for contracts that are more complicated, having an experienced attorney go through it can be extremely valuable.
Every business contract should be clear about certain terms. For example, if the contract concerns goods to be supplied, the quantity, type and price are essential. Also crucial components are the delivery terms, the payment requirements, and a provision for rejection of the goods if they do not meet certain standards. For service contracts, again, the services should be described with specificity. The term of the contract–i.e., how long the contract is in force for–also needs to be set forth clearly. All contracts should have some provision that allows for termination by one or both parties and the provision should specify a mechanism for doing so.
Payment terms and termination clauses are two of the most contested provisions in business contracts. In order to avoid litigation, special care should be taken with respect to these items. As for payment, the contract should state how much is due, when it is due, and what the consequences are if payment is not made in a timely fashion. Making sure this is included in the contract will help to improve one’s chances that payments are received when due. Similarly, every contract should specify under what terms and conditions the contract can be ended, and how much notice is required. There should also be a provision that provides for what happens after termination, with respect to any unfulfilled responsibilities and obligations.
Lastly, choice of law and jurisdiction provisions must be included in one’s contracts. Stated simply, if you are a New York business, then your will want disputes to happen in the New York courts, and he/she will want New York law to govern. One certainly does not want to litigate or arbitrate in a distant jurisdiction.
Having an attorney prepare or review one’s business contracts can help to avoid disputes, and the costs incurred in doing so do not necessarily have to be exorbitant, especially when compared to the financial savings to be achieved down the road.