Beneficial Legal Guidance For Your Business Contracts
At Hunt Pennington Kumar PLLC, we offer intelligent business law representation for the drafting, negotiation and review of business contracts. Individuals and business entities of all sizes throughout Texas rely on us for our knowledgeable counsel. Contact us at 512-503-7334 or send us an email to request a complimentary initial consultation with an attorney.
What To Consider Regarding A Business Contract
Thoroughly consider the life of the agreement under different scenarios. To start with, conjecture execution. Each agreement should answer the following six inquiries:
- Who is committed to perform
- What is the commitment
- By when should the commitment be performed
- Where will the execution happen
- How is the commitment to be performed
- If execution includes cash or products, what amount
Second, imagine nonperformance and default. The agreement ought to ensure your customer by expressing a solution for the potential default of every commitment. Default arrangements contained in most frame contracts are seldom satisfactory, and they, for the most part, don’t follow the gatherings’ aims. The cure of the default arrangement is normally the end of the agreement, and for some ruptures, the nondefaulting party still does not want to end the authoritative relationship.
Think about the most dire outcomes imaginable. Expect that the parties become hostile toward each other, looking to undermine the other party at each opportunity. Will the agreement give adequate direction to oversee the relationship? Will it give adequate direction to a court translating the agreement or forcing cures, if important?
What To Know About Business Contracts
People enter into contracts on a daily basis. Working on a job in return for wages or payment is an example of a contract where one party is providing services and the other party in exchange is providing the financial payment. Purchasing an item at a store is another example of a contract where a person receives certain goods in exchange for a payment.
The term “contract” often refers to a written agreement. However, there can be valid oral contracts as well. A written contract generally includes a number of elements:
- Recitals or introductory material
- Key terms definitions
- Agreement purpose
- Obligations and liabilities of each party
- Triggering conditions for certain liabilities or events
- Warranties, representations or covenants of each party
- Dispute resolution mechanisms such as arbitration, mediation, courts with jurisdictions and applicable law for dispute resolution
- Remedies available to each party including any liquidated damages
- Certain boilerplate provisions
- Exhibits, annexures and schedules
- Signature blocks
As opposed to such simple contracts, businesses often deal with more complex contracts related to varied types of agreements such as provisioning of services, purchase of goods, terms of employment, leases, financing agreements, loan agreements, confidentiality and nondisclosure agreements, licensing agreements, purchase and sale agreements and myriad other types of contracts.
Minimizing Your Allocation Of Risk
Contracts are meant to detail the expected behavior between the parties to the contract and are a means of allocating the risks, benefits, liabilities and constraints between the parties. These terms are generally only relevant when something goes wrong and the parties look to the contract to impose liability on the other party.
Many of these clauses and the language of the terms can look innocuous until something goes wrong and they often prove to be very costly. It is important for a party entering into a contract to understand the consequences of these terms and conditions and have a clear understanding of the risks and benefits of such clauses.
Generally, in business, it is almost impossible to take zero risks and still get a reward. Therefore, businesses often agree to enter a contract with unfavorable terms, which can be acceptable if so dictated by the business, but it should be done with a knowledge of the consequences and proper weighing of the risks-rewards involved. Entering a contract that may have hidden time-bombs or where a party does not fully understand the consequences can be a costly mistake.
Therefore, it is very important to consult with a trusted legal adviser who can ensure that the contract is fair, educate you on the consequences of the various clauses, help you to negotiate the terms to protect your interests and, as a consequence, help you to make informed decisions and avoid unnecessary future liabilities while providing you mechanisms to enforce your rights against the other party to the contract.
Our law firm, Hunt Pennington Kumar PLLC, can advise you as a business owner, entrepreneur, manager or an individual with most business law-related contracts and provide legal advice for services such as startup assistance including the formation of an entity, contracts and agreements needed for the business operations, protection of a trademark, license of intellectual property, agreements required in the process of buying or selling a business, etc.
Negotiating A Favorable Contract
Negotiating a contract is a process wherein each party agrees upon the material terms of their agreement and tries to maximize its rewards and reduce its risks. The terms of a contract between parties can easily be divided into two distinct parts – the business terms and the legal terms. In general, it is advisable to agree upon the business terms prior to negotiating the legal language that reflects the business agreement as negotiations tend to take longer and may result in failure.
It is often a common occurrence where a business deal hammered out between parties fell apart during the legal negotiations between the parties’ lawyers. Often, the different perspectives of a business owner and the lawyer can be blamed for this. A business person negotiating a deal is generally optimistic and often more focused on the rewards, whereas the lawyer is trying to envision the worst-case scenarios and trying to remove all risk and liabilities for the client. Principal attorneys in our firm have been business owners and entrepreneurs, and they understand the balance between the risks and rewards and endeavor to educate the client on the consequences, so as to allow the client to make an informed decision on the level of risk the client is willing to take for the associated rewards.
Negotiating a good deal requires you to understand the other party, their goals, their alternatives, their positions and options so that you can find the optimal agreement point which is most favorable to you but still acceptable to the other party. Our attorneys can play the role of the negotiator on your behalf to achieve the most favorable terms for you in your contract negotiations.
Types Of Contracts
Our attorneys can review, draft and negotiate contracts related to various business activities:
- Buy-sell agreements
- Service contracts
- Releases and waivers
- Property agreements
- Shareholder agreements
- Company operating agreements
- Lease agreements
- Confidentiality and nondisclosure agreements
- Employment agreements
- Noncompete agreements
- Licensing agreements
- Investor rights agreements
- Placement agreements for fundraising
- Numerous other common business contracts
Our past experiences enable us to look out for your interests and help negotiate a contract that is advantageous to you, provides the optimal risk-reward balance and protects your interests by mitigating risks.
Discuss Business Contracts With A Business Lawyer
If you’re in need of a business contract, get in touch with us. Call 512-503-7334 or send us an email. You’ll have a trusted adviser on your side looking after your interests and helping you avoid future liability.