TIPS

Three reasons why to have your business contracts prepared by a lawyer:

1. SAVE MONEY BY AVOIDING DISPUTES
2. GET IT DONE RIGHT AND INCREASE YOUR PROFITS
3. YOUR BUSINESS IS ONLY AS GOOD AS ITS PAPERWORK

Many business owners don’t use lawyers until they need them. Some lawyers may be costly, some may be slow. There may be templates and kits available online. Why hire a lawyer to draft your contracts?
What follows are three ways that having professionally drafted contracts can save your business money, make your business more efficient/profitable and make it worth more money.

1. SAVE MONEY BY AVOIDING DISPUTES

   The most common reason clients have their agreements reviewed or prepared by a lawyer is in case of litigation. If things don’t work out, the business owner will benefit from having a contract to prove their case. If there is a clearly drafted and enforceable agreement then the parties can either avoid court all together or achieve an early settlement. The terms of the contract will narrow the issues in dispute and quickly determine the likelihood of success if the dispute were to go to court with enough precision to permit the client to make informed decisions to settle or litigate. Oral contracts or poorly drafted agreements make it very difficult to ascertain the rights and obligations of the parties with precision. Without a good contract it may be unfeasible to rely on the judicial system to resolve a dispute, without spending a lot of time and money and with uncertain results. What this boils down to is that having good contracts will save you money proving your side of the story in case things go wrong and keeping you out of court.
   TIP: Customized business contracts can be prepared as a form to be filled in with standard terms and conditions favorable to your business to save you money. For example an employment / contractor agreement.

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2. GET IT DONE RIGHT AND INCREASE YOUR PROFITS

   What if, instead of preparing for the worst we want to increase our chances of achieving the best results in your business? Where many business relationships run into trouble is in the unspoken expectations that either party has of each other and inconsistent understandings of the business itself. When two parties share the common goal of striking it rich they may be less likely to unearth all of their expectations of each other and complexity of the events that may unfold in the course of business. A well-drafted contract will lay out a series of clauses to address what will happen if scenarios to give guidance to the business in its operations and resolve issues before they become hotly disputed. Through the use of industry and client specific appendixes in the contract many of the logistics of a business relationship can be worked out in advance so that things run smoother and more efficiently, with each party knowing exactly what is expected of them and what they can rely on from the other. Contracts are meant to be living documents that precisely reflect how a business operates and therefore regular revisions to agreements will enhance the benefits that can be derived from them. Getting it done right at the contract stage will enhance the chances of businesses smooth and profitable operation.
   TIP: Often a table of deliverables and deadlines makes its way onto a dry-erase board on the office wall as the result of a serious project management effort. That information also belongs in a contract and can be added and modified at any time.

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3. YOUR BUSINESS IS ONLY AS GOOD AS ITS PAPERWORK

   Many businesses are owned and operated by close friends and sometime family members. The personal and professional relationships that people have may be of great benefit to the smooth operation and success of business and allow them to sleep well at night, confident they will be able to amicably resolve whatever issues come their way. In other cases, the standard practice in the industry or a great disparity in bargaining power may lead one to operate with nothing more than a handshake and maybe some emails, invoice or a deal memo. Just because these business owners can sleep well at night with this state of affairs, doesn’t mean that the next guy will see things the same way.
   At some point the business may need to obtain financing, take on a new partner, or be the subject of a buy-out. In these cases, the lender, partner, buyer or more particularly, their legal counsel, will look to a businesses corporate and commercial paperwork in addition to its financial statements in order to decide if and how much they will offer. If this way, the documentation of a business is its foundation and having well-documented business enhances its value.
   TIP: Exclusive Dealing Agreements are a great way to enhance the value of a business by provided a steady income stream, even if a relatively small one by comparison to other sources.