It is critically important to have a basic understanding and appreciation of written contracts. A written contract plays a vital role in any business transaction. Before entering into any transaction, parties commonly negotiate and discuss the terms of such a transaction. Often, a dispute will arise because there isn’t a written contract between the parties documenting the terms of their agreement, or one or both of the parties failed to understand their contractual obligations at the time of entering into the agreement. Where parties believe that they have a trusting relationship, they may assume that it isn’t necessary to capture the terms of their agreement in a written document.
In the event of a dispute arising where there isn’t a written agreement, parties must rely on other forms of evidence to prove contract terms. This is a very difficult, and costly exercise. In this instance, parties often resort to litigation and these matters proceed on trial. It may be months, if not years before a matter is resolved, and the parties have incurred substantial costs in litigation.
Considering the above, before signing any agreement, it is prudent that parties ensure that they read and understand the actual terms of the contracts they sign, and not rely on any representations made during negotiations. If a party fails to understand the agreement, and nevertheless signs, they run the risk of being bound to a term which they may not have knowingly agreed to.
Contracts not only serve as a legally binding agreement, but also serve as a reference to the terms agreed upon. The wording of a clause in an agreement is extremely important in that a single word can negate any contractual provision. The following is a brief list of some of the most crucial contractual provisions that should be addressed in every agreement.
- Term
- Indemnity
- Waiver
- Limitation of liability
- Dispute Resolution
- Breach
- Costs
- Damages and/or Penalties
- Payment terms
Often parties avoid approaching an attorney to draft an agreement, as they view this as “unnecessary” costs however, one can’t compare the costs of enforcing a complete agreement with those of enforcing an incomplete, or verbal agreement. Should you require assistance in drafting an agreement, advice during the negotiation stages, or require assistance in enforcing an agreement, Aitken Attorneys would be happy to assist you. Our firm will discuss the costs with you prior to the commencement of any mandate.