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3 reasons contracts are so important for successful businesses

On Behalf of | Jan 9, 2023 | Business Law |

Signing a contract can seem like a hassle, especially if you just finished tense negotiations. Some companies and even some highly-successful professionals fail to use contracts as consistently as they should for their own protection. They resolve their negotiations with a handshake and a verbal agreement, trusting that the other party will follow through and intending to make good on their own promises.

Committing the terms of your agreement to writing will be critical to your protection as you do business. Unfortunately, verbal agreements simply do not offer all of the benefits that contracts do. Why should you secure a written promise from every client, vendor or service provider for providing work or transferring funds?

  1. Contracts are easier to enforce

Although it is theoretically possible to hold someone accountable for verbal promises and agreements in Ohio, it can be exceedingly difficult to do so, especially if they have no qualms about lying. It could come down to your word against theirs in civil court if all you have is a verbal agreement with one another.

  1. Written contracts eliminate confusion

A contract will make it easier for you to point to the exact terms that the two of you set. Contract breaches aren’t always the results of intentional misconduct by one party to the agreement. Sometimes, there are assumptions made during negotiations that neither party affirms verbally.

Other times, memory failures or confusing one agreement with another might lead to inappropriate expectations or behavior on the part of one party to the contract. When you have a written agreement, it is easy for either of you to quickly verify what the terms are and what the other party expects from you.

  1. Contracts can offer you secondary protections

In addition to agreeing to do business with the other party in writing, your contract could also protect you by ensuring your privacy through a confidentiality clause.

It could prevent damage to your business’s reputation by requiring arbitration or other alternative dispute resolution services before you end up in court. The contract could even impose late-payment fees or similar penalties in a scenario where one party becomes non-compliant.

Drafting customized contracts for different business transactions and agreements will help you optimize the protection of your company as you continue doing business.

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