Senior Associate at Neves Solicitors Simon Porter, explains the importance of obtaining legal advice when negotiating and drafting contracts.
Most savvy business owners know the value of a well drafted contract. It enables parties to come to mutually beneficial agreements which facilitate innovation, creativity, and business expansion. But drafting a contract is easier said than done. A non-lawyer could draft something that looks like a contract but it is deficient and possibly very risky. It may even contain provisions that are not legally enforceable. A poorly drafted contract creates ambiguity, confusion, and misunderstandings that can derail a business and other deals.
Contracts spell out the rights and obligations of parties in a number of different contexts. These are some of the types of contracts your business may use:
- Partnership, joint venture, and shareholder agreements between co-owners of a business
- Lease agreements for physical space your business wishes to occupy
- Employment contracts that spell out the rights and obligations for employees
- Financing agreements for lending or investing purposes
- Standard terms and conditions of trading
- Licensing agreements to ensure that intellectual property is not stolen or misused
- Non-disclosure agreements to prevent the disclosure of trade secrets and other confidential information
The objective of entering into a contract is to clarify the parties’ obligations while providing them with legal protections. To do that, you need a contract that is tailored to the exact needs and nature of your business. Attempting to fit your business into a generic contract will not protect your company and could even increase the risk. A good contract makes litigation less likely by providing enforceable rights and remedies upon breach.
Drafting is an important step, but negotiating your contract is also critical. Whether you or the other party initially drafted the contract, the details will have to be negotiated. This could mean several rounds of discussions between the parties. If successful, the process will result in revisions and modifications to the original draft.
During the drafting and negotiation process, you need an experienced contract drafting lawyer. Your lawyer will be able to explain the proposed revisions and the consequences they could have for your business. A skilled practitioner can also suggest which revisions should be rejected or modified. Sometimes, to keep negotiations moving forward, you can suggest acceptable alternatives to the other parties. Also, parties will occasionally include provisions that are not enforceable for one reason or another. Your lawyer can spot these and propose solutions for handling them.
Negotiating usually means compromising. Everyone naturally wants a contract to be 100% in their favour but we all know that’s not realistic. A skilled contract drafting lawyer understands your company’s values and desired outcome but will also help you avoid making unreasonable demands that could destroy the negotiations. At the end of the process, the final compromised agreement will on balance benefit and protect the interests of your company.
Need help with negotiating and drafting contracts?
Neves specialist commercial solicitors have expertise in all areas of contract law. Get in touch with their experts if you need help with contract negotiations or assistance getting a contract drawn up, reviewed or amended. Call 0330 0945 500 or email firstname.lastname@example.org