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Creating enforceable business contracts

On Behalf of | Jan 28, 2022 | Business Law |

Your business contracts are a reflection of how you operate your company. From establishing your responsibilities to your employees to providing a reliable timeline for services, your contracts enable your company to make business predictable.

When the other party doesn’t uphold their end of a contractual agreement, you may have no choice but to go to court and litigate the contract. Sometimes, the other party may try to avoid their responsibilities by invalidating the contract in court.

There are certain things to do when signing a contract that will reduce the likelihood of this happening to you. 

Include protections and terms that benefit both parties

One of the easiest ways to invalidate a contract is to show that it is inappropriate and one-sided. Both parties should receive some kind of valuable consideration in the contract.

Sometimes, that will be payment for services rendered. Other times, it might be a job offer or a promotion. Being explicit about what each party receives under the contract will make it easier for you to show that it was a fair and balanced agreement.

Sign in from of witnesses even for a simple agreement

Having witnesses to a contract signing may seem like a silly formality, but those witnesses may eventually play an important role. If someone claims that they didn’t sign the contract, a witness can counter that claim.

Similarly, if the other party tries to sidestep their responsibility for the contract through claims of intoxication at the time of signing, a witness can validate whether or not they were sober. Given that a lack of testamentary capacity could easily invalidate your contract, a witness can be a crucial protection against claims that the other party did not understand the consequences of their actions.

Include language for addressing a breach of contract

Perhaps the best way to ensure that you received the outcome you need in a breach-of-contract scenario is to include rules about what will happen if the other party violates the contract. While specific penalties for a breach don’t make the agreement inherently more enforceable, they will make the outcome of enforcement actions more predictable, which can be beneficial for your business and for negotiations with the other party.

Knowing what to include when drafting a business contract can help you if you have issues with that contract in the future.

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