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10 Mistakes to Avoid When Creating a Contract Agreement


Are Your Contracts Putting You At Risk?

To do business effectively, you’ve got to have contracts in place to make sure that both parties fulfill their responsibilities. This gives a business owner the ability to pursue their clientele who don’t follow through with their financial obligations, provide inventory as promised, or other responsibilities that have been agreed upon within the contract. In order for this to happen, you’ve got to have a contract that is legally binding. The problem that many business owners face is that they are making mistakes with their contracts and this is causing those contracts to be considered legally void.

Common Pitfalls to Avoid

There isn’t a level of specificity to the contract.
A contract must exactly outline what responsibilities are assigned to each party of the contract. Without that specificity, it can be difficult for either party to attempt to collect on specific items that are felt to be delinquent because the language in the contract is general in nature. To avoid this mistake, make sure each task, duty, or responsibility is clearly outlined and that there are no questions about the text.

The contract calls for something that is illegal.
There are a lot of strange laws on the books, even today. From not being able to look at a moose on an airplane to not being allowed to put pretzels into bags, there are local laws that will literally blow your mind. If your contract happens to violate the law in any way, then the contract can be deemed void. Before entering into a contract, check for local laws that the other parties may need to follow and insure that your contract doesn’t ask them to violate those laws in any way.

The contract is considered impossible to fulfill.
It’s OK to set the bar of expectations high, but not too high. There must be a reasonable ability or chance for someone to fulfill a contract based on their abilities and skills. If that isn’t in place, then a contract can often be considered void. If, for example, you asked a construction worker who specializes in building desks to build a computer for you from scratch and they had no formal training in computer engineering, that would likely be considered an unreasonable expectation.

The documents are incorrect.
Maybe the most common mistake in the modern contract that nullifies it are documentation errors. These aren’t errors in spelling or grammar, but are instead errors in reflecting the responsibilities of each party or the tasks that must be completed. Any inconsistency within a document in this manner, including mis-identifying who the responsible parties happen to be, can make either a portion of the contract void or even the entire contract if it is challenged. Make sure every jot and tittle is taken care of so that this doesn’t happen to you.

A well written, well-developed contract can help make doing business much easier. A poorly constructed contract, however, could spell the end of a business. If you use contracts for your business, make sure they can pass these tests so that they can be considered legal and you can get the fair compensation that you deserve.

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