3 Problems With Not Having a Lawyer Review a Business Contract

 

Signing a business contract seems like a straightforward process, but many potential disasters can strike if you sign one without first performing your due diligence. The easiest way to avoid these pitfalls is to have a lawyer review all contracts before they’re signed.

 

Let’s look at three potential problems that can arise from signing a business contract without having a business lawyer review it first.

 

1- Get the Best Terms

 

A business contract can easily contain red flags or other pieces of bad business that might not seem apparent at first, especially if it contains dozens or even hundreds of pages.

 

For example, buried on page 52 could be a clause that requires you to pay thousands in poorly defined “fees” if the other party is unhappy for any reason, which they would certainly have the incentive to find with so much money at stake. A good lawyer will be able to spot these clauses and prevent you from significant financial losses.

 

2- Potential Illegal Clauses

 

If the contract hasn’t been subject to legal review by either party, illegal or potentially illegal clauses might appear. Of course, you’d likely win if the contract is contested in court, but only after spending a significant amount of time and money.

 

Contract law can be very complex, so it wouldn’t necessarily be something blatantly illegal like “Employees will be forced to work for no compensation on days that end in ‘-day’”. They could easily slip in a clause with phrasing like, “Instead of suing us, you agree to binding arbitration decided by a person of our choosing.” Small phrases wouldn’t jump out to normal people, but an experienced lawyer will easily be able to spot them.

 

A lawyer, especially one specializing in contract law, can parse the legalese and explain why a specific part of the contract violates state, federal, or local laws before it ends up in front of a judge.

 

3- Recognize Potential Future Disputes

 

A lawyer will also be familiar with the types of cases frequently filed in court. For example, one common type of contract dispute is the misunderstanding, where the contract terms are poorly defined and either side can interpret the actual text in a way that benefits them.

 

For example, let’s say a construction company is handed a contract for a massive project that requires 200 employees working simultaneously to complete on schedule. This contract states that “adequate portable restrooms will be provided.”

 

Under OSHA regulations, one toilet seat and one urinal must be provided for every 50 workers. That means 200 people will be sharing four toilets and four urinals, which most construction companies wouldn’t agree to if they knew in advance.

 

A lawyer will recognize that “adequate under the law” and “adequate in real-world conditions” are different and suggest revising to a specific number.

 

To Sum Up

 

All business contracts should be reviewed by a lawyer to eliminate red flags, prevent illegal clauses, and clarify terms that will likely end in a dispute. Having the contract read in advance can save you a lot of potential legal fees and protect your company’s reputation in the future.