Building a successful business requires building strong connections. The relationships you have with your partners and associates are essential to the success of your company.
A contract dispute can disrupt the day-to-day operations of your business and cost you time and money in court. Fortunately, you can reduce the likelihood of a contract dispute by following some simple tips.
Put it in writing
In Texas, certain business transactions require a written contract, including:
- The sale of real estate
- A lease for a term longer than one year
- A contract that will take longer than one year to complete
- Certain contracts pertaining to oil, gas or mineral rights
In many circumstances, however, oral contracts are legally binding. This can lead to trouble if one party disputes the terms of the contract and there is no paper trail. To avoid this, ensure that you have a contract in writing.
When negotiating the contract, written correspondence should include a disclaimer that the negotiation is just that and not a legally binding contract. This can prevent the other party from claiming you promised something you did not.
Be specific
Vague or subjective language can lead to misunderstandings. You should be as specific as possible so all parties understand exactly what they are agreeing to. For example, a phrase like “in a timely manner” is unhelpful because timeliness can be subjective. Instead, you might say, “within five business days.”
Provide a way out
Sometimes a collaboration simply does not work out. Before signing a contract, it is a good idea to ensure that you have included terms for terminating the contract in a way that is fair to both parties.
A contract dispute can ruin a professional relationship. A well-drafted contract can help you avoid conflict and develop strong business relationships.