One of the best ways to avoid lawsuits is to take preventative measures – one of the best preventative measures is having well-written contracts. Well-written and legally enforceable contracts avert many small business disputes that might otherwise become a litigation frenzy. Every so often litigation is unavoidable, but having a contract helps simplify the process, providing solid and organized evidence. This helps ease the expense of litigation reducing attorney workload and subsequent fees. Small business contracts are both an essential part of running a business and a great preventative measure against costly legal battles.
A Forward-Thinking Contract is a Great Lawsuit Repellent
Contracts are one of the best ways to avoid litigation down the road. The best contracts are “forward thinking”; in other words, ones that include all possible scenarios and the solutions. For example, in a commercial lease agreement, you should consider the different problems that can likely arise. Address these problems and specify who will be responsible for fixing them. Who is responsible for paying and fixing infrastructure damage due to a natural disaster? Normal wear-and-tear? If you forget to put in these types of contract provisions and such a scenario arises, disputes are likely to occur. For instance, both parties may be reluctant to take responsibility and pay for repairs. This situation becomes the perfect catalyst for a lawsuit.
Contracts Speed Up the Litigation Process
Even when litigation is unavoidable, having solid contracts really help speed things along. Contracts play as important a role in a civil lawsuit as physical evidence does in a criminal case. Contracts are a key source of evidence and that’s why they need to be well drafted and organized. The better the contract, the better the evidence and the faster and easier the litigation process will be. Plus, nothing looks worse in court than an ill-prepared small business owner who was not professional or diligent enough to use contracts. Being prepared with solid evidence in a lawsuit and having your contracts ready will ensure you do not instantly lose favor with the judge.
Tips to Drafting A Forward-Thinking Contract
Luckily, for most types of contracts, there are excellent templates that address the various and complex issues that arise in small businesses. Companies such as DocStoc.com have the resources and templates available for small business owners to use in drafting a “forward thinking” contract. After finding a solid template, you should also keep these things in mind:
- Be sure to cater each contract to your specific business needs. No contract template can ever address all issues because every business is unique. Take the time to consider what other provisions you need to add.
- You are not at war with the other party. A big mistake many business owners make is they try to draft a one-sided contract that only protects one side. Always keep in mind that a respectable contract is one that is fair and somehow benefits all parties.
- Keep an open line of communication with the other party or their legal representative while drafting a contract – that way both parties can brainstorm and ensure all the bases are covered. You will end up with a sophisticated contract that will greatly reduce your chances of getting into a lawsuit.