Making deals and ensuring income is often the top priority for many business owners. Because of this this, business transactions and contracts have become the bedrock of the corporate world. But when these deals take a turn for the worst, they can become expensive problems for everyone involved.
Creating an enforceable contract and planning for potential legal disputes is the first step in preventing business transaction disputes. Learn three ways that you can protect your interests in a business transaction and how to stop the escalation of a contractual dispute.
An ounce of prevention is worth a pound of cure
Setting expectations and taking proactive measures when planning a business transaction can save you time and money. This process often starts with a letter of intent. This letter set the terms and timeline of a transaction. When creating or reading this document make sure that you have a realistic idea of your expectations and goals.
When finalizing a business transaction, here are three ways you can protect your interests:
- Get terms down in writing: Although verbal agreements are technically enforceable, they can present a legal challenge in the courtroom. Both parties may have different ideas of the material terms of a verbal contract and these disagreements can lead to litigation. A written contract allows everyone involved to get a clear idea of their contractual obligations.
- Make sure your contract is enforceable: A contract is only as good as its ability to be enforced. Business cannot enforce a contract that breaks the law, also known as a violation of public policy. Additionally, poorly worded contracts can allow the other party to weasel out of their obligations during enforcement.
- Have a plan for a beach in contract: Businesses should have a plan for what they will do in case of a breach of contract. A breach of contract can end up in litigation, which can be an expensive and lengthy process. All parties should create a plan of attack to recover their investment before signing a contract.
What should I do if I experience a breach of contract?
If another party has already breached the terms of your contract, your first step is to contact a knowledgeable business litigator. This attorney can review your contract and determine what options you have available. Do not send any threatening letters or negotiate with the fraudulent party without a lawyer by your side. Any actions that you take without legal counsel can cause problems in the courtroom and may prevent you from obtaining compensation or damages.