How exactly do you make sure that your commercial contracts are totally infallible? There’s nothing worse than being on the wrong end of a contractual loophole. Just when you thought that everything had been neatly tied up, and you have a contract that carefully defines the relationship you have with a client or customer, it can be thrown back in your face before the ink has even dried on your signature.
It should go without saying then, that preventing these loopholes from ever emerging is absolutely essential in business. No matter what industry you work in, you need to make sure that there is no room for maneuver – that’s unless you fancy getting involved in lengthy and costly commercial litigation proceedings.
Here, we discuss nine tips you can keep in mind if you want to make sure that your commercial contracts remain infallible.
9 Tips for an Infallible Commercial Contract
Always Have it in Writing
First things first, if you’re creating a commercial contract, you always need to have down in writing. No exceptions. If a commercial contract isn’t put down in writing and signed by all the relevant parties, it can be difficult to enforce it in the courts.
While it’s not impossible to defend a verbal contract in court, there’s a chance that the situation can turn into a classic case of ‘he said/she said’. Get your contract down in writing if you want the situation to be transparent.
Keep the Terms as Simple and Concise as Possible
If you want to make sure that your commercial contract is entirely effective, then it’s good practice to make sure that its terms are as simple and concise as possible.
If a commercial contract is long-winded and confusing, then it’s unlikely to be properly understood by the other party you’re dealing with. Remember, one of the main goals when it comes to contracts is ensuring clarity – that’s certainly not going to be achieved if the terms included are very difficult to comprehend.
On that same note, you should always be mindful of avoiding any unnecessary jargon which may be misunderstood or misinterpreted.
This is for the same reason as the previous point. You want to make sure that the contract is as easy to comprehend as possible. This won’t be possible if the contract is made inaccessible by the use of complicated or industry-specific language.
Focus on Consistency
Keep the tone of language you use – as well as the specific terms – consistent throughout the contract. You need to remember that the contract isn’t ever going to be a page-turner, so there’s no need to try and add some variety.
Use the same language throughout and don’t deviate from the terms so that there is no room for alternative interpretation.
Define Parties by The Correct Names
This may seem like a very simple tip, but you’d be surprised how many commercial contracts are picked apart when a detail as seemingly obvious as this is overlooked.
When you’re defining the terms of the parties involved in the agreement, make sure to use their exact trading name. For instance, if you’re negotiating an agreement with ‘Fuller Accountants Ltd’, don’t be tempted to use a more colloquial term to refer to them as ‘Fullers’. This could be picked apart if you’re involved in a dispute regarding the contract.
Make Sure Payment Terms Are Always Included
One of the most prominent causes of commercial contract disputes is related to the fact that payment terms aren’t always included, or at least made immediately obvious.
If you don’t have payment terms included in your commercial contract, then it’s going to be difficult to clarify exactly when you’ll be paid and how much you’re likely to receive. And, if you’re running a business, that’s not exactly going to be helpful – right?
Agree on Circumstances Which Terminate the Contract
The contract you create is going to come to an end at some point. That’s an inevitable. So, you need to make sure that you agree on the circumstances which discuss how you will come to the end of the contract.
Depending on the type of contract you have drafted and how long the commercial relationship is due to last, you can decide whether to include any termination clauses. This can help to cover you if the other party breaches any terms.
If the commercial contract you sign allows the other party to access private company data, then you need to make sure that you agree on a confidentiality agreement. If this provision is breached, you’ll be set to claim against the other party for damages.
Work with a Commercial Solicitor
Finally, and before you sign anything off, you should always seek out independent legal advice from a specialist commercial solicitor. They can review the suggested terms, making sure that they are watertight, as well as being closely aligned with your general commercial objectives.
A commercial law solicitor can also make you aware of any issues that might occur based on the terms included, reducing the potential for any future conflict or disputes.
Do You Have Any More Tips for Creating an Infallible Commercial Contract?
In this post, we’ve discussed just some of the many tips to keep in mind for creating secure commercial contracts. No matter how valuable the contract is, making sure that you have an airtight contract is absolutely essential.
Speaking to an expert solicitor in the matter is paramount to making sure you miss nothing out.
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Photo 3 – Gabrielle Henderson via Unsplash