The truth is, however, that a contract can only protect you if it is binding. Here are four quick and easy steps to take to ensure all your business contracts are effective at providing the protection you intend them to:
Step One: Make sure you have the names right
It may seem basic, but one of the sure fire ways to make a contract unenforceable is to use the wrong names or even misspell them. That’s right, a little thing like typo can render a contract ineffective. Therefore, always review all instances of names and double check to ensure they are the proper legal names for the parties signing the contract.
This is particularly true of Company Names as well. If the company name is incorrect, the contract could be interpreted by a Judge to only be with an individual, and not a company. This would nullify any advantages limited liability could provide.
Step Two: Clearly identify payment obligations
Because payments can be one of the most contentious sections of a contract, careful attention should be taken up front to eliminate possible misunderstandings or inconsistencies. Here’s a list of questions to ask when it comes time to add details to the payment area of a contract:
• When are payments due?
• To whom should they be made?
• Will payments be made in installments? What are the due dates for each installment?
• When is the work to be completed?
• What recourse is to be taken if there is a dispute between parties as to whether or not the work is completed?
Knowing the answers to each of these questions ahead of time can help smooth out any bumps concerning payments along the way before they derail the project.
Step Three: Put EVERYTHING in writing
Quite simply, anything you’ve agreed on but haven’t added to the contract will be unenforceable. In order to protect both parties, everything about the working agreements MUST be added in writing to the contract. Failure to do so could lead to disputes that could disrupt the working relationship and derail the project as a whole.
It’s important to never make assumptions. Don’t trust the person you are entering a deal with to remain as amicable and positive months or years down the line as they are upon the day the contract is signed. Protect yourself by getting everything into the terms of your contract.
Step Four: Include a section that covers reasons for termination
The truth is that things sometimes do not go as planned in the real world. Therefore, it’s very wise to include a section in the contract that covers the circumstances where the contract will be considered terminated even if the described work is not completed. Here are some questions to consider that should help cover the basics needed in a termination section:
• What should be done in the event one party continually misses the stipulated deadlines?
• What should be done in the event the work done is not up to the standard it should be?
• What should be done in the event payments are not made (or able to be made) on the agreed upon schedule?
• What should be done in the event of unforeseeable events like natural disasters, fire, theft, or injury?
Still have questions?
Please call us for a free appointment with Miami business attorney Yoel Molina in our Miami office at 305-548-5020.