A Good Contract Makes Good Business Friends

business-contractA Good Contract makes Good Business Friends

If you want to get along with customers, vendors, and other people you do business with - always have a good, well-thought-out contract. The biggest mistake you can make is to sign a boilerplate agreement without a second thought. And office supply store contracts almost never do the job. A well thought out contract is your best friend. Because properly designed contracts keep promote good, friendly relationships with other people and can actually keep you out of court.

What is Wrong With My Current Contracts?

I am always amazed when looking at contracts presented to me by vendors. The most glaring error is a complete lack of detail on the type of job, the scope of the job, what is included or excluded, and how long the job will take. The problem is that nice, reasonable people do occasionally have disagreements. People never tend to pull out and examine contracts when everything is going great. The contracts come out when you-know-what hits the fan. And that is exactly when people realize their contract completely lacks detail. The lack of detail throws everything up in the air. Because the basic reality is that all human beings see and hear things different. One person's definition of the phrase "right away" is completely different from another persons' definition. So if the inevitable happens and you must pull out your contract - more often than not the contract will offer no help. I believe over 80% of contracts fit in that category and are no help. A poorly written contract only offers one potential future: arguments and fighting over what was agreed-upon.


Most small business contracts are poor cut and paste versions of someone else's contract. At best they are unenforceable and at worst they are completely useless. One common boilerplate paragraph is a requirement for arbitration. If you have no idea what that is or the associated expense then why would your contract call for arbitration? The fact is that arbitration is often more complex and expensive than small claims court. The only person that does well financially is the arbitrator. So you may want to delete the arbitration clause

Just about every contract has a venue clause. Here is where many situations are won or lost. The basic idea is to require any court cases to be filed in a specific state or city. Are you aware that some of your contracts require you to see a lawyer 800 miles away from your place of business? Examine your contract to see if it has a venue clause. And if that clause is completely stacked against you - it would be a good idea to negotiate a different place.

Opportunity to Cure

The most misunderstood concept in business relationships is the opportunity to cure. It may be in your contract but does not need to be. The courts will normally consider it to be part of your deal. The basic idea is that you cannot declare the other side to be at fault, not pay, and then stomp away. Before someone breaches a contract - they must be given an adequate opportunity to fix the problem. That applies to both sides. This concept is very important and should never be ignored.

Your Homework

1. Always look at contracts and read them from beginning to end.

2. Make sure the contract has a complete description on what is to be done.

3. Negotiate the venue clause and make it livable for you.

4. Produce a contract that everyone can live with - because a good contract can make friends. A bad contract is sure to make enemies.

Howard Iken is an attorney with Ayo and Iken PLC in Florida. Besides practicing as a New Port Richey criminal defense attorney, he also helps clients with bankruptcy, and divorce matters in the New Port Richey, Florida area.

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