When running a small business, there are many situations that involve signing a legal contract. These can range from employment contracts, to partnership agreements, to leases. But do you always consider these seven things before signing on the dotted line?
The 7 things to be aware of when signing a legal contract
1. You are allowed to negotiate
When signing a legal contract, the situation is almost never “take it or leave it” – and, if it is, that is a problem. As one of the parties, it is your right to make sure the contract works on your behalf and that your interests are protected. The best way to do that is to work with a small business lawyer. Remember that it is not enough for a lawyer to have written the contract. You need a lawyer who is working for you to read it over as they will focus on your interests in particular, making sure the contract serves you.
2. Know the other parties
A contract is a relationship. Just like you would not marry someone without knowing who they are, you should not tie yourself to an employee, partner, or other party without doing research into them. This can include internet and personal research. You may also want to ask if your small business lawyer has had experience with another party in the past and, if so, if there were any issues.
3. Read the contract
While this sounds simple, many people do not actually read contracts before they sign them. This is an issue as contracts are legally binding, whether you read them or not. Therefore, it is important to make sure that you are willing to follow all elements of the contract before you sign anything.
4. Understand every part of the contract
Along with reading the contract, it is important that you understand every clause. At times this can be challenging as contracts are often written in legalese. This is where a small business lawyer can assist you. If there is anything you do not understand, ask your lawyer to explain it in common language. Do not worry about looking silly for not understanding something. Your lawyer is on your side and is only interested in making sure you are aware of what you are signing.
5. Know how to terminate the contract
In any contract, you want to make sure you have an exit strategy if things go wrong. If there is not a termination clause built into the contract or if you are not happy with the clause that exists, work with your small business lawyer to negotiate a new one. A lawyer will also be able to help eliminate or minimize any penalty to you for terminating the contract.
6. Remember this is a significant responsibility
After signing a legal contract, you have to keep up your side of it. This can be a significant responsibility. Therefore, before you sign anything, you need to make sure you are ready to take this on. If you need time to consider if you are ready to sign, speak with your small business lawyer and they will negotiate a period for you to do this.
7. Keep a copy
You should always have a signed copy of any contract you are involved in. This way, if you are ever unsure about any of the clauses, you can refer back to them. Also, if there are legal issues down the road, you may need to provide your copy of the contract. When you work with a small business lawyer, they will also retain a copy for your company’s file at the firm.
The most important thing to watch out for when signing a legal contract…
When signing a legal contract, the worst sign is pressure. While contracts may be time sensitive, you should never have another party threatening or pressuring you to sign. If this is happening, that is likely a sign that something is wrong. The best way to protect yourself? See a small business lawyer as soon as possible. Not only will they assist you, but they can also contact the party pressuring you on your behalf, ensuring they alter their behaviour.
While you should always arrange a consultation before signing a legal contract, a small business lawyer can also assist you in a variety of other ways. Not sure what they are? We have created a list of the many ways a small business lawyer can help you.