How careful transactions can help parties avoid litigation down the road
4 insights about agreements and contracts
The purpose of any agreement or contract is to define each party’s rights and responsibilities. The terms and conditions of a contract are enforceable in court. Agreements and contracts create a specific beneficial relationship to prevent future disagreements. The agreement is a type of guideline dictating how the parties should conduct themselves, their roles, and expectations. Some agreements are inherently complicated. No matter how well they are drafted, disputes may still arise.
Drafting Clear Agreements Will Signify the Parties’ Understanding
While parties to a contract have shared intentions to avoid future disputes, each party has their own interests and agenda. While verbal contracts are valid, drafting a clear written contract signifies the parties’ mutual written understanding of its terms and conditions from the start.
Agreements often seem to consist of legalese that can seem dry and excessive at times. However, many of the critical terms of the agreement and boilerplate language are necessary. Sometimes, they will be what actually makes or breaks a contract. These terms incorporate principles used to interpret the language of a written document known as common contract interpretation.
When there is a dispute about how one party conducts themselves, parties and their lawyers will reference the terms and conditions of an agreement to settle the dispute. Business attorneys will analyze every sentence and term to help them gather the true meaning and intent of its formation.
The nuances in contracts are just as important as understanding the intent of the entire document. As such, the terms must not be ambiguous or too vague. Suppose the agreement doesn’t explicitly provide specific details about how it should be carried out or is generally unclear. In that case, the parties will need to discuss the issue to resolve it thoroughly. Hiring a business attorney to help resolve the issues will decrease the chances of going to court.
In cases where they are unable to settle the dispute, the parties will find themselves in costly litigation. In the most contested disputes, the business relationship will likely be tainted and come to an end.
Frequent Transactional Disputes
Colorado business owners encounter several common transactional disputes. Transactional disputes can arise over various issues such as construction, real estate, vendor contracts, and software development.
Lease agreements between tenants and property owners are frequently used to define the responsibilities of each party clearly. Disputes involving lease agreements typically involve issues such as responsibility for the upkeep of the physical property, the monthly rent, and often including add-ons, such as utilities or common area maintenance (CAM) fees.
Incomplete agreements often come back to cause transactional disputes. If one or both parties to the agreement don’t know what is expected of them, disputes are almost inevitable. When drafting any agreement, both parties should be attentive and ensure that they include the full bounds of the relationship. All agreements should be thorough and detailed.
Breaches of agreement occur when one party doesn’t fulfill their obligations within the agreement. In other words, they don’t comply with the terms of the agreement. Non-compliance gives the other party to the agreement rights to a legal remedy to get the benefit of the bargain. Examples include failure to pay, delay in performance, or failure to perform to the contract’s standards.
How to Avoid Business Conflicts
Disputes regarding contracts and agreements are time-consuming. They are stressful for both parties and can become expensive. More time spent resolving transactional disputes is less time a business owner can invest in their business affairs and growth. However, business owners can take several proactive steps to avoid transactional disputes from arising in the first place.
Business lawyers are experienced and trained professionals who can draft and implement an agreement. Consulting with one can help businesses to decrease their chances of being involved in a dispute.
Put all business agreements in writing. Written contracts significantly increase your chance of preventing disputes and resolving them successfully if they arise. The terms of the contract should be clearly defined, especially if there are commonly used terms or terms with more than one meaning. Defining the terms will provide the most clarity and eliminate any vague interpretations.
Any supporting documents to the agreement should be saved and carefully filed. Supporting documents can be used in any future discussions over disputed terms or agreement issues. Even if these documents aren’t allowed in court, they can prove helpful in the parties’ initial discussions about the agreement’s interpretation.
Business Lawyers are Key Members of Your Team
The right business lawyer is a key player for businesses in drafting an agreement and in the dispute resolution process. Not only do lawyers understand how to create an unambiguous and clear contract, but they are also highly skilled at discussing disputes and resolving issues. Their services are indispensable if the parties must resolve their dispute in court. A knowledgeable lawyer will be instrumental in helping the business maintain profitable business relationships. A business owner’s best advocate and advisor is a lawyer who works with them every step of the way. Choosing the right lawyer will help businesses avoid future costly and overwhelming legal issues.
Aaron Atkinson and Doug Griess of Hackstaff & Snow, LLC, are top Denver attorneys with litigation and corporate law experience spanning various industries. Focusing on business law, litigation, intellectual property, tax law, estate planning, and dispute resolution, Hackstaff & Snow, LLC attorneys are a trusted resource for business owners throughout Colorado.