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How Can Contracts Help Prevent Business Litigation?

As a business owner, you have likely considered the  possibility of business litigation. You may even have insurance coverage for the costs associated with business litigation. Perhaps you have even been a party to business litigation over a dispute that arose regarding your business. Especially if you fall into this last category you know exactly how costly and stressful it can be to engage in business litigation. Even if you are the party initiating the lawsuit, business litigation can take time and money that you would rather avoid having to spend. So, you may be wondering, “What is the best way to avoid business litigation?” There are several good answers to this question, but this article focuses on one: Draft Strong Contracts.

 

  • Contracts are essential to many parts of your business. Contracts are, no doubt, part of your daily business practice. Whether it is a contract for the sale of goods, employment contracts, or contracts for your services, contracts are essential to any business.

 

 

  • It can be easy to overlook the importance of contract terms. Depending on the law in your state and the subject of the contract, you may not absolutely need a written contract. Even if you are required to have a written contract, you may be tempted to scratch something out on paper, or to use a template you found online to get the job done. Because you are likely dealing with so many contracts, you may feel like you do not have time to consider all the “fine print” when drafting or agreeing to contract with someone else.

 

 

  • A large percentage of business litigation is related to contracts. Business litigation often arises when you are sued for breach of contract or when you need to file a lawsuit against someone who has breached their contract with you. However, much of this litigation can be avoided or simplified by having clear, concise contract language that specifies all requirements from both parties to the contract.

 

 

  • You can reduce the number of times you must litigate and, if you do have to litigate, you can simplify court proceedings by drafting a clear contract for each transaction.  You should write all contract terms carefully, including dates, times, amounts, and any “side agreements.” By having a contract that correctly and clearly identifies the terms of your agreement you will reduce litigation by setting clear expectations. If you do end up in litigation, you will have a clear memorial of your agreement to show to the court. A qualified business attorney can advise you regarding what information you need to include in your contract to make it comprehensive and also to make it valid under your state’s law.

 

Remember, the best way to protect your business, including protecting it from potential litigation, is to consult with a qualified litigation lawyer Melbourne, FL. An experienced business litigation attorney will be able to offer you advice on a variety of topics including how to draft contracts that strengthen your business and shield you from unnecessary litigation.

 


 

Thank you to our friends and contributors at Arcadier & Associates for their insight into business litigation and contracts.