We are all familiar with the well-worn adage regarding contracts: they are made just to be broken. And while it may be true—and even humorous at times—no one likes to think about that while they are spending hours negotiating a serious business agreement. Perhaps in some cases a handshake would be enough, but unless you are operating in the Wild West, a contract is important for numerous reasons.
In building a thorough agreement, you and your business partner are able to include all the necessary details, expectations, financial obligations, and specific timeframes regarding the deal, project, or partnership; for instance, if you are working with a contractor to build out a new site for your company, you can include the total project scope and specifics for managing the job, outline the types of materials you want used and how much they will cost, as well as deciding on when payments are to be made, when deadlines occur, and how any changes are to be made.
If you are creating an agreement to bring on an independent contractor for either a shorter or more extended period, dates should be included, expectations for the job, and any details regarding intellectual property and copyrighting—depending on the type of work being performed. If you are bringing on a new partner to share in your business, the relationship could have many layers—and so must the contract. Delegation of duties must be included along with outlining exactly how the partner figures into the business—and for how long. Plans for profit distributions and all financial aspects should be included too.
Working with a skilled business attorney like Attorney Shane Coons can make all the difference in creating an airtight agreement. With strong legal expertise behind you, it is much easier to negotiate and build a contract that binds all the parties involved together in the agreement, making the document enforceable in court. If a breach of contract occurs later, you can also work with your attorney in taking steps to rectify the situation, whether through negotiation or taking legal action. Typical breaches are as follows:
- Minor – this is usually when one party does something different than was agreed upon, but with a change that does not affect the actual outcome of the project. Again, a construction project is a perfect example here. Perhaps a contractor used a different type of windows and doors than were agreed on, but the functionality is the same. If you were suing the contractor over this breach, the rest of the project could continue while you sought damages in the form of the correct materials.
- Material – this type of contract breach is more serious, and often involves the failure of the supplying party to provide an actual product related to the success of the project. This type of breach may lead to a complete halt of the project or relationship, with serious damages sought.
- Anticipatory and Actual – an anticipatory breach refers to one party announcing that they will not be fulfilling their end of the bargain before any work starts; in an actual breach, the party does not fulfill their obligations, and damages may be sought. While these terms are simple and quite clear in definition, the situation could turn out to be very serious, resulting in a complex case requiring damages to be paid.
In any contract, a clause should be included for dispute resolution. Obviously, this is much better dealt with in the beginning before the parties working together have a beef with each other! You can outline whether you would prefer litigation or alternate dispute resolution such as mediation or arbitration in the case of a future dispute. Details such as where the case would be decided and who would pay any attorney’s fees can be written into the clause also.
If you find yourself in the middle of a contract dispute, consult with an experienced attorney like Shane Coons right away to protect your business. Call now at 949-333-0900 or email us at Shane.Coons@seclawoffices.com. We will be glad to meet with you to review your case and explain your legal options. Our office is here to help!