Whether you are starting, buying or selling a business, or if you are considering a commercial real estate transaction, it is critical that you get proper legal advice to protect your investment and ensure the success of your enterprise.
A contract is a voluntary agreement creating mutual obligations that are enforceable under the law. Breach of contract disputes are extremely common, so it is important to understand your obligations and to ensure that the responsibilities of the other party are clearly understood before you sign on the dotted line.
If there are ambiguities in the contract or clauses that are unfair to you, you should not be afraid to renegotiate such terms. Having an attorney negotiate or review important contracts is always a good idea, as he or she will have to defend you or make a claim on your behalf if something goes wrong.
The purpose of a contract goes beyond merely reducing an oral agreement to paper. Its main purpose is to force the parties to figure out who has to do what, and how, and by when, and for how long.
Some people try to simplify the process of contract negotiation by using standard contracts that often have nothing to do with the kind of deal under discussion. You should make sure that the contract is relevant to your transaction, and that it clearly spells out the requirements for both parties. Never sign a contract that you have not read or do not understand. If you are confused about a term or concept, have it explained or deleted. If there is a key term or factor missing, make sure you include it. You have no protection on something that is not covered in the contract.
Once an agreement enters into force, you must comply with it meticulously. If you don’t honor it, you lose your right to complain when the other party violates it. If you must deviate from an agreement, you should notify the other party in writing that you need to amend it.
States vary in how they regulate contract enforcement, and about what kind of testimony is admissible in contract dispute litigation. Don’t assume that you will be able to explain your interpretation of the contract in court when there is a conflict. You need to pay particular attention to the jurisdiction and mode of contract enforcement. If you don’t, you may one day find yourself in Delaware arguing over Connecticut law.
Be aware that your business needs may change as time goes on, and make sure that you have an exit strategy. When a given deal no longer makes financial sense, you need to be able to terminate a deal with reasonable notice to the other party.