The contracts which record the profitmaking activities of a modern business are all too often neglected. This may turn out to be a very poor investment decision in a tight economy. Contracts are more than words printed on paper. Who needs a lawyer to draft a watertight contract?
I can draft a contract, there's no magic in it
True – there's no magic, but there's usually some law. The law of contract is found in statutes and precedent which evolves as the courts decide cases before them. Commercial solicitors keep abreast of the law. There is no scope for the "I thought that meant ..." or "I meant it to say ..." mitigation when the provisions of a contract are judged at some future consideration of their terms. It's not always what is written in a contract that makes the difference, it can be what has been left out.
We avoid going to court, so why do we need a legal contract?
If you concede every dispute you get into, you are unlikely to end up in court. If you want to enforce your contractual rights, the lack of a good contract can thwart your best intentions. Keeping contractual disputes away from the courts relies on well crafted contract documents.
There is a view that whatever the contract says, businesses will work something out if a problem arises. Contracts do not prevent compromises being reached, but the goodwill to resolve issues amicably can be a light which fades with the passage of time. A good contract provides a base-line for negotiated solutions. The party with the better contractual position stands more chance of achieving the outcome it seeks.
We cannot afford to upset the other side
Contracts are never negotiated in a vacuum. The commercial strengths and vulnerabilities of the parties will impact on their ability to negotiate the terms they want. It can be difficult for a company that needs to win a contract to stand up for itself without incurring the displeasure of the other side, but the other side will be more willing to accept that a prudent company, advised by lawyers, cannot ignore the professional advice it has received. A lawyer on the negotiating team can enable you to punch above your weight.
Lawyers just cost money
Of course lawyers charge for their services – they charge when they draft the contract documents through which business is done and they charge when resolving disputes arising from contracts which fail to live up to expectation. Legal fees in a distress situation can be significant and there might not be a budget for them. Legal fees incurred in drafting contractual documents can be planned and managed and can save you fees later.
Summary
Contracts forge the links in modern supply chains. Chains are only ever as strong as their weakest link. Contracts, like chains, can restrain freedom, or they can take enormous strain. The investment in properly drafted contracts pays dividends if you have to rely on contractual terms to get paid or to seek remedies.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
