Contracts are the cornerstone of business. Unfair terms or misunderstanding your obligations under the contract could have drastic consequences for your business. Whether you need to write an agreement or want a legal assessment before you sign, our Winter Park, FL contract drafting and review lawyer can help. With almost five decades of combined experience in business law, you can trust our attorneys to protect your best interests and mitigate risk on your behalf. We recommend having our business lawyer take a look at every type of contract, including employment contracts, sales agreements, licensing deals, and more. Our attorney highlights contract red flags so you know what to look for to avoid a risky arrangement.
Vague or Ambiguous Language
When a contract has wording that could be interpreted in different ways, that is a red flag. There should not be any “gray” area in an honest agreement. Some phrases to watch out for include:
- “Substantial”
- “Reasonable”
- “Best efforts”
- “Satisfactory”
- “Timely”
- “Prompt”
Ambitious terms make it easier to be exploited, especially those related to timelines, payment, and deliverables. For example, if a contract says you will receive payment after “substantial progress” is made on the project you are hired to complete, you may assume that means once tasks are halfway done. The other party could argue that “substantial progress” refers to a final draft. Based on the language in the contract, you don’t have legal standing to demand payment before the final draft is submitted, leaving you vulnerable to being taken advantage of.
Renewal or Termination Terms
It is important that a contract clearly states the conditions for renewal or termination. You want to make sure that you have a legal pathway to exit the agreement if the other party does not fulfill their obligations. Automatic renewals or fees for terminating regardless of the reason are red flags and necessitate a review by our business law attorney. We will explain the ramifications of terminating and any potential risks you have to signing. This way, you can enter an agreement confidently and with an explicit understanding of what you and the other party expect of each other.
Hidden Fees and Payments
All financial terms should be listed clearly in a contract. These details include when payments are owed/deposited, any fees, and possible expenses that aren’t part of the primary transaction or agreement. If this is a long-term arrangement or business purchase agreement with multiple payments, make sure the schedule is clear and accounts for bank holidays or other delays that would interrupt operations. If the contract involves a loan or payoff plan, verify the interest rates and whether or not there are other penalties that could impact your bottom line.
One-Sided Liability Clauses
It is essential to understand liability risks before signing a contract. One-sided liability terms or indemnity clauses could put you in a dangerous legal situation. These conditions shift blame to you and may carry financial consequences. For example, if you are hired as a subcontractor on a construction project, the general contractor may include an indemnity clause in the contract. If you or your team makes an error or has an accident, the indemnity clause may protect the general contractor from liability, meaning you are on the hook for compensation. While indemnity clauses are typical in many industries, it is still wise to have our business contract lawyer review the document so you are aware of the risks.
Lack of Dispute Resolution Protocol
Unfortunately, business disputes are common. It is important to have a plan for resolution in the contract. These terms make it easier for both parties to communicate, express concerns, and handle disagreements in a productive manner. If a contract doesn’t have a dispute clause or is vague about how either party should handle problems, that is a red flag and could mean the contractor is trying to skirt accountability should a violation occur.
Drafting Contracts That Work For You
Before signing on the dotted line, speak with our Winter Park contract drafting and review lawyer first. We will carefully read through every term and point out risks so you aren’t taken advantage of. A bad contract means loss of money. Our team at Hirani Law won’t let that happen. We are passionate about serving clients throughout Florida and are ready to take your call. Get started by scheduling a consultation with our business attorneys today.