Well-Crafted Contracts Can Build Strong Relationships
Solid business agreements — and due diligence — help set expectations, plan for the future, and even prepare possible exit.
Often the best way to avoid a conflict in business is to think about how one may arise — then craft a business agreement that may address foreseeable issues well in advance.
Partners or contracting parties with the best of relationships and intentions can end up feuding. Misunderstandings, changes in circumstance or other issues can lead to missed expectations and irreconcilable disputes. That’s where contracts are well worth the investment in time, insight and money it may cost to craft them.
Pre-contract planning starts with due diligence well before the pen hits paper to draft a business agreement. Almost every potential partner has a history. Good or bad, their reputation — with previous partners, clients, vendors, landlords or others — likely precedes them. If you haven’t worked with an individual or company before, research their time in business, reputation and previous projects and any history of litigation or judgments.
Seek out references, and if asked, freely offer your own. Trust is a two-way street.
If comfortable with the results and confident that you and your partner or organizations can work together, get your own — and mutual — expectations in order. The business’s mission, vision and definitions of “success” are more than some conceptual exercise. It’s vital for both parties to lay out their expectations prior to crafting a formal business agreement.
It goes without saying, the days of business done “on a handshake” or cocktail napkin, even among life-long friends, are long gone. Contracts should be precise in detail befitting the nature of the engagement; a contract between two local small businesses should be different from that of two multinational corporations, yet it is no less important.
Any language, promises or commitments made in conversations or emails must be incorporated into the document; outside the written agreement they generally are meaningless. Be doubly clear on this; the contract should state that no amendments or terms, expressed orally or in writing after the contract’s signing are unenforceable unless signed by the parties. That’s why many emails include disclaimers that no terms are binding unless signed by both parties.
To be sure, business agreements must have far more details than those mentioned here, including reasonable changes in circumstance or what happens in the event of conflict or amicable partings. But communication is critical. If you sense something is awry, don’t be afraid to express your concerns while there is hope of resolution.
Beyond serving as business counsel and drafting the contract, your attorney can help in times of crisis. Rely on them to de-escalate issues, resolve disputes, identify common ground, or negotiate an amicable parting based on the original agreement they drafted.
For more than 50 years, Tripp Scott has played a leadership role in issues that impact business.
Learn more at TrippScott.com.
COO of Tripp Scott and chair of the firm’s litigation department. With 30 years’ experience, he focuses his practice on civil and complex business disputes in both federal and state courts, including shareholders disputes under Ch. 605 and Ch. 607 of the Florida Statutes.