Contracts serve as the backbone of your business, governing relationships with investors, clients, employees, and various stakeholders. Despite their pivotal role, many business owners underestimate the significance of these agreements, either by crafting their own or relying on inexpensive, do-it-yourself (DIY) legal documents purchased online. However, neglecting the due respect for legal agreements can lead to significant financial repercussions, including substantial attorney’s fees, court costs, or even jeopardizing the business’s existence.
Given the potential risks, it is essential to engage the services of an experienced business lawyer like us to prepare or review your agreements. To highlight the complexity of legal agreements and the risks associated with a do-it-yourself approach, here are 10 pitfalls that could seriously jeopardize your company if you opt for the DIY route with these critical legal documents.
1. Neglecting to Use Legally Documented Agreements
Verbal agreements might seem sufficient, but overlooking legally documented agreements can lead to major costs in the future. Well-drafted agreements protect assets, intellectual property, and relationships, providing insights into potential conflicts before they escalate.
2. Signing Without Reading (or Understanding) an Agreement
Complex legal jargon in agreements requires thorough understanding before signing. Consulting with a Family Wealth and Estate Attorney ensures a comprehensive comprehension of terms, preventing potential legal issues in the future.
3. Failure to Include (or Negotiate) Key Terms
Assuming that certain terms are unnecessary or standard is a common mistake. All terms in an agreement are negotiable, and overlooking key terms can lead to disputes. Professional legal counsel ensures the inclusion of necessary terms.
4. Failure to Establish a Clear Performance Standard
Agreements must specify performance expectations, especially in subjective areas like performance evaluation. Clarity on goals, objectives, and deliverables prevents conflicts and ensures the success of the relationship.
5. Not Defining What Constitutes a Breach
Anticipating potential issues and establishing a clear process for addressing each problem is vital. Defining breach scenarios and entitlements for each party in the agreement provides a roadmap for navigating challenges.
In the upcoming part two of this series, we will delve into the remaining pitfalls that you may encounter when navigating your company’s agreements on your own. Remember, seeking professional legal support is a crucial step in safeguarding your business from potential legal challenges. Contact us today to schedule a consultation and ensure the proper handling of your business agreements.
DON’T DO-IT-YOURSELF
Take the step to refrain from signing any legal agreements without having them thoroughly reviewed by our Exclusive Legacy Planning Session professional, bringing valuable family business planning expertise into the mix. This strategic decision is a prudent and invaluable business practice, one that we consistently advocate for each of our clients. Whether you’re seeking a review of existing agreements or require the drafting of new ones, we stand ready to assist you. Engaging our support in handling your agreements could prove to be the decisive factor for your business success. Reach out to us today to arrange a meeting and secure the future of your business.
This article is presented by Michelle Bell, an expert in estate planning and business succession services. Our office provides comprehensive legal support for businesses, assisting you in making informed decisions throughout your entrepreneurial journey and in planning for future contingencies. We also offer a specialized session where we review your business’s legal structures. To arrange this consultation, please click the following link: https://calendly.com/mcblawpllc/30min.
The information in this article is intended purely for educational and informational use and should not be considered as advice on ERISA, tax, legal, or investment matters. For advice specifically tailored to your unique situation, such advice should be sought independently from this educational content.