1. Who are you contracting with?

Make sure the contract accurately identifies the parties. A contract isn't a contract without an agreement between two or more; a contract can be between persons, entities, or both. Before signing a contract make sure the parties are accurately listed within the four corners of the document. If you are contracting on behalf of your corporation, make sure the corporation is the listed party, not you (the proprietor/individual owner). For example, if you are contracting with a vendor to supply your store with bottled water and you list yourself by name individually as the party to the contract instead of the name of your store, you will be personally liable to that vendor for any occurrences under that contract. You want to be sure the vendor knows it is contracting with your business, not you personally. If you list yourself personally on the contract, you will be personally held responsible for any mishaps. Please note: there are a few exceptions for when a contract is with an entity but the owner of that entity is still held responsible. The general rule is that you are not personally liable for the liabilities of your business.

2. What do you get, what do you give, and when does it end?

Make sure the contract clearly describes the purpose of the agreement. The contract should clearly specify what each party will do and when they will do it. For instance, one party will supply goods on x date and another party will pay x amount on x date. A well-drafted contract will make clear what will be provided, and when, by parties on both sides. The goal is to ensure there is no room/need for outside interpretation. Everything you need to interpret the parties’ roles and duties should be within the contractual document, or at the very least, referenced and attached. Ambiguity is the cause of most contractual disputes, therefore an attorney should review your contract to ensure all terms and descriptions are as clear and unambiguous as possible. For instance, "goods are to be delivered the morning of March 1st" may be an ambiguous term to a buyer who wants goods to be delivered before 9AM. Termination is also important, you need to have a date for when the contract or agreement between the parties end (whether on a specific date, happening of a specific event, or upon completion of a task) and additionally, what kind of notice of termination is required.

3. What happens if one of the parties breaks their promise?

Make sure the contract outlines what will happen when one party doesn't uphold its end of the bargain. Generally, people and businesses have good intentions when entering into a contractual agreement and give their promise to abide by that agreement in good faith when they sign a contract. However, if one party doesn't uphold its end of the bargain, the contract should specify what remedies will be available to the damaged party and how the dispute will be resolved (mediation, arbitration, or litigation). Generally, if one party breaches the contract, the other party is entitled to be made whole again through requesting damages and/or a court order directing the other party to specifically perform what they originally promised. In some instances, damages may be difficult to determine for a particular agreement and therefore the contract specifies an amount, agreed upon in advance, that is owed to the party if the other breaches (liquidated damages clause).

5. What specific contract clauses have you included?

Make sure you include some basic contractual clauses that address key issues. Who will pay the attorney's fees and costs if there is a dispute? (i.e. does the losing party in litigation pay the prevailing party's fees and costs?). Are oral promises outside of the written contract allowed? (If oral promises are not allowed the contract should contain a clause that states that the contract is intended to be the final agreement of the parties, that it is complete and exclusive, and that no agreement is binding unless it is in writing and signed). Can the contract be assigned to a third party? Are consequential damages (i.e. lost profits for the breach) allowed?

An attorney should draft and review your contract before the signing. Almost all of our contract litigation cases our clients, whether individuals or large businesses, that had entered into contractual agreements that they drafted themselves and never reviewed with an attorney. Unfortunately, a lot of those clients have ended up paying legal fees that were far in excess of what they would have paid just to have us draft and review the written contract in the first place. Our attorneys offer free consultations, so there really is nothing to lose. Let us draft, review, and negotiate your contracts - an ounce of prevention is worth a pound of cure.

*This page serves as general legal information and does not in any way constitute legal advice or serve to formulate a legal relationship.