Every company has contracts that control the most important aspects of how they do business. For an online business, it might be that the terms of service for the website and contracts for employee (or independent contractors) that matter most. For a manufacturing business, it may be a commercial lease, a supplier contract, a buyer agreement, or all three. For a service business, the contracts used when on-boarding a client might be of the utmost importance.
Some contracts are only a couple of pages long, while others include hundreds of pages of legalese. Regardless of how complex your key contracts need to be, all enforceable contracts must include certain legal elements, such as offer, acceptance, and consideration. Certain types of contracts are enforceable only if they are in writing.
The agreements that are most important to your business should be drafted with care and attention to detail so that your company’s unique needs are met. An improperly drafted contract could damage your business in unforeseen ways. For example, if you prepare a written document meant to impose an exclusivity requirement on your primary supplier, but the arrangement is not supported by adequate consideration, you could find yourself with an unenforceable contract (and your supplier could sell you out to your competitors). In much the same way, a sloppily drafted non-solicitation (or non-compete) agreement that doesn’t take into account binding caselaw in North Carolina could come back to bite you down the road if your former employee starts a company or joins a competitor and takes your company’s clients with them. What was meant to be an enforceable non-solicitation agreement that protects your business could end up being nothing more than a worthless piece of paper.
Contracts can be designed creatively to control most every aspect of a business relationship, but key contracts should generally do the following:
- State the nature of the relationship between the parties;
- Detail the obligations of each party under the contract;
- Explain how long the relationship will last and if there are any circumstances under which the term will be (or can be) extended by a party;
- Describe how the agreement can be terminated and for what reasons;
- Tell the parties how billing and payment will take place;
- Set out the method for settling disputes;
- State any promises or pre-conditions necessary to the beginning of the relationship between the parties; and
- Pre-determine who is responsible for paying for litigation costs or defending the agreement in the event of a dispute.
Contracts can plan for countless scenarios. What’s most important is that your key contracts cover all of the issues important for your type of business. Spengler & Agans has experience thinking and planning for all sorts of contingencies, including some that may not be so obvious to your company early in its growth.
Need help making sure your company’s key contracts suit your needs? Contact us here to schedule a consultation.