Without the correct information, a simple contract has the potential to turn into a legal nightmare. Fortunately, there are steps that can be taken to ensure than an agreement between two parties, whether it be individuals or businesses, will be enforced according to the terms embodied by the deal and intended by the parties involved.
First, and most importantly, is to remember to put everything in writing. Although not every single term of a contract needs inclusion in order for it to be enforced (for instance, when dealing with the sale of goods, an inadvertently omitted price can always be guesstimated by a court to be the going market rate), why chance it? If its in writing, it makes it that much more difficult for a party to dispute the terms. If subsequent oral agreements are made, make sure you reduce them to writing. Never rely on another's good word, regardless of the extent of your business and professional relationships. An oral promise or handshake to extend a delivery date or lower a price may sound fantastic, but as a businessperson you must protect yourself. Once it is in writing and signed by the appropriate person, it has a good chance of withstanding any arguments to the contrary.
Second, a contract needn't be chock full of legalese in order to be binding. Sometimes too much mumbo-jumbo can backfire. Confusing, ambiguous and/or vague terms may come under legal scrutiny, forcing a court to try to interpret the terms on its own. Forget about attempting to intimidate by inserting Latin words and ongoing sentences with too many "hereto," "there before," and "here before me comes." Instead, focus on what you really want to say. Be as simple and straightforward as possible. A contract can not be voided on the sole grounds that it is easy to read.
Third, always make sure you are dealing with an individual who has the authority to bind the other party. A salesperson who was never given the authority to act on another's behalf cannot legally bind that party to a contract, therefore making the contract a possible target for legal dispute. Although this situation is unlikely to occur in dealings between parties who have done extensive business together in the past, it never hurts to be sure that the person you are dealing with is the legal agent for that party, particularly when it involves new business relationships.
If the other party is enlisting the services of an attorney in preparing the contract, you should too. Lawyers can be tricky folks, and the last thing you want to do is sign your name to a document that has a substantial amount of legalese unintelligible to a layperson. In this situation, you are at a real disadvantage. Have an attorney read it over, apprise him or her with the terms you want to include or avoid, and question any provisions or words that you don't understand or disagree with.
Lastly, be as specific as possible. Avoid ambiguities. In law school every contracts student learns the famous
