With proficiency in business and real estate law, the attorneys here at Eskander Loshak LLP are well equipped to help our South Florida clients in two significant ways:
One is by providing the comprehensive legal advice and representation needed to resolve any concerns or difficulties our clients are experiencing.
The other is to make sure our clients are properly informed, so they fully understand the legal nuances and potential consequences of their actions. By taking this proactive approach, we help our clients avoid mistakes that can sometimes lead to business or commercial litigation.
With that being said, we thought we’d begin 2019 by sharing some insight on common contract issues that can lead to lawsuits. Here’s what you should know in order to avoid unnecessary, unpleasant, and potentially costly contract disputes.
Poorly drafted business agreements spell trouble
Clearly, any contract that isn’t well thought out or well written is bound to result in some sort of misunderstanding. In a best-case scenario, the disagreement can be easily resolved. In a worst-case scenario, it will escalate to the point where it becomes an ugly dispute that ends up in court.
So what defines a poorly conceived and drafted contract? To begin with, it could be one that doesn’t fully explain what constitutes a violation or breach of the agreement. Of course, this will largely depend on the nature of your business and the type of agreement. But some common examples of breaches include failure to meet a specified deadline, failure to make a payment upon delivery/provision of a product or service, or the provision of a defective product.
Another example of a poorly drafted contract is one that doesn’t include any stipulations or provisions regarding unforeseen events. The inclusion of these types of provisions – which can address anything from market volatility to the sudden illness of key personnel or even natural disasters – are especially important when there’s lots of money at stake.
Lastly, a deficient contract may be one that doesn’t include provisions for the protection of intellectual property. These provisions are essential for businesses involved in certain creative endeavors, engineering, manufacturing, or technology. Without them, disagreements can easily surface over the ownership and use of proprietary material.
Haste makes waste
In many cases, key players in a business transaction just want to get the deal done. To facilitate the process, one party may allow the other’s attorney to draft the contract – this is usually a recipe for disaster. Without participation and adequate supervision by an attorney for both parties, one side can easily gain an unfair contractual advantage. Barring that, allowing only one lawyer to draft and/or review a contract can also result in misconceptions about key terms. This can result in serious disputes that can be difficult, if not impossible, to resolve without court intervention.
If you’re at the point where a contract is in play, chances are there’s a lot at stake. Avoid the temptation to close the deal in a hurry. Allow a certain amount of time for both attorneys to craft and review the document before it is signed. Doing so is one of the best ways to make sure your interests are protected and avoid potential misunderstandings.
Anticipate problems and include contractual provisions for solutions
In a perfect world, there would be no need for contracts, lawyers, or any type of dispute resolution. A handshake and promise to do the right thing would be enough and if something did go wrong, we’d all be able to work things out on our own. But as we all know, the world in which we live is far from perfect.
This is why effective contracts often include stipulations as to what must happen in the event of a disagreement. Depending on the situation, these provisions may call for mandatory mediation or arbitration. In some cases, the contract may even include stipulations about the circumstances in which a party may pursue legal recourse.
Failing to include these types of provisions may make it more difficult to resolve any disputes that arise.