Business Contracts: The Basics

Picture of Schuyler "Rocky" Reidel

Schuyler "Rocky" Reidel

Schuyler is the founder and managing attorney for Reidel Law Firm.

Business Contracts: The Basics

Every small business will encounter some, if not many, contracts or agreements during their existence. Small business owners should enter into contracts and agreements with care. It is easy for a busy owner to casually enter into agreements, too often these owners learn the hard way. Every business contract should protect the interests of the business. Keeping contracts succinct and unambiguous is an important piece in protecting the interests of the business. When a contract is not succinct or is ambiguous, courts have more liberty to take with interpretation. Drafting contracts to consider all possible situations that may arise give even more certainty to businesses in contracts, saving thousands on legal costs when court interpretation is necessary.

Always get your contract in writing and in the clearest language possible. While oral agreements are generally enforceable, it will often require costly litigation. All business owners regret not writing something down when their legal case becomes a ‘he said-she said’ nightmare. At the very least write it down. While you are writing it down, spare the legalese and write it so you and other parties can clearly understand the meaning. Even in litigation where courts interpret contracts, plain English is king.

Be specific. All the little details that sometimes get mere passing consideration during contract negotiations absolutely need to be in the written contract. Details like delivery dates/times/locations, risk of loss, how to pay, when to pay, duration of the contract, and how to terminate the contract need to be included in any business contract. Sometimes it is important to include a clause which determine which state’s laws govern the contract. For interstate contracts this is necessary, avoiding yet another litigation trap when contracts are challenged. The more details included, the more certainty a business contract gives a business.

Mediation and arbitration clauses can help dramatically reduce the cost of litigation for contracts that become challenged. Mediation is a negotiation process with a certified, neutral mediator. Arbitration is similar to court, where a neutral arbitrator decides the resolution after hearing both sides. Both are much cheaper and quicker than pursuing litigation and worth considering for your business contracts.

Of course the best defense is a good offense. Reidel Law Firm offers flat rate contract and document review for Texas small businesses. Flat rates keep your legal costs under budget while professional attorney review gives you the security and certainty needed for business owners.