Effective and binding contracts are one of a business’s most valuable tools. A good agreement can create a strong foundation for a prosperous arrangement between the company and its vendors, customers, employees or another third party. Ones not strategically and thoughtfully drafted can have the opposite effect, causing costly and stressful disputes.
It is always essential to read a contract. Moreover, it often is critical to have an attorney review crucial and valuable ones to ensure that there are no red flags or warning signs that could impact the company’s bottom line. Understanding the signs and addressing potential problems can set the right tone. If the other party is unwilling to address the concerns, it may be best to walk away, thus avoiding potential future problems.
Common grounds for disputes
- The vendor or supplier is unwilling to compromise or negotiate a reasonable agreement.
- The contract has questionable provisions like auto-renewals or pre-negotiated price hikes.
- The contract offers terms that are too good to be true.
- The contract has technical details that are overly complicated or nonsensical.
It’s best to be prepared
Knowledge is power, particularly when it comes to negotiating a business agreement. It is often best to research the other party to learn how they conduct business, treat clients and handle disputes. Conversely, it is also essential for the company to determine what is negotiable and what is not.