Small business owners typically will need to enter into numerous types of contacts over the years. These may be contracts with clients, customers, partners, vendors, suppliers, and others. Contracts are designed to protect the interests of both parties. They may specifically require different parties to act in specific ways, and they also may require compensation to be paid. Some contracts may have penalties outlined if parties fail to act according to the agreed upon terms. Before you sign a legal contract as a business owner, you should be aware of a few important facts.
There May Be Loopholes
One of the more important things that you should be aware of is that contracts may be written with loopholes that may be difficult for a layman to identify. Hiring a lawyer to review a contract before you sign it is essential if you want to fully understand the terms that you may be preparing to agree to. Your attorney may also recommend adjustments to the contract wording so that there are built-in loopholes that you may take advantage of in specific situations.
You May Be Sued for Non-Compliance
A signed contract is a legal agreement that you are required to comply with. Most contracts require both parties to act in specific ways. When you fail to hold up your end of the agreement, the other party may hire a lawyer and sue you for non-compliance. The penalties that you may face in this type of situation can be significant.
You May Need to Sue to Ensure Compliance
Likewise, you may find yourself in a situation where the other party is not living up to their end of the agreement. This could negatively affect your business’s reputation, or it may wreak financial havoc on your business in some way. Regardless of the specific impact that it is having on your business, you should hire a commercial litigation attorney to explore your legal options. You may be able to sue for compliance or for damages.
Business owners generally enter into legally-binding contracts in order to ensure that other parties act as they have agreed to. You may make professional decisions based on the expectations that individuals or businesses will act in certain ways, and signing a contract gives you a greater sense of confidence that they will follow through on the agreement. However, there are always instances when parties do not follow through on the terms that have been agreed to. Because a contract is a legal agreement, you should consult with a lawyer before signing a contract and when you have questions about the terms.