Is Your Business Using Legally Binding Contracts?

Is Your Business Using Legally Binding ContractsIf a non-lawyer is preparing the agreements used by your company, chances are one or more of them are not legally binding contracts. Needless to say, this creates problems when you try to enforce them at law.

What To Include In Your Agreements To Make Them Legally Binding Contracts

Although the terms and conditions will vary, as a general rule you’ll want your agreements at a minimum to (1) be in writing, (2) clearly identify the parties and describe what each has promised the other to do as part of the agreement, and (3) be signed by persons who are both legally competent and have the authority to bind the parties to the agreement.

Related Article: Business Contracts – Do You Make These 4 Costly Signature Mistakes?

Are there other ways to create enforceable agreements? Of course.

For example, there are verbal agreements that can become binding contracts based on the performance of one or both parties. There are also some unique twists with electronic transactions and deals made under state law that adopts the Uniform Commercial Code (UCC).

Yet, just because something can be done doesn’t mean it should be.

As a practical matter, professionally prepared business contracts by an experienced attorney are far more likely to be legally binding than informal deals done without lawyer involvement.

Legally Binding Does Not Mean Favorable To You

It’s also important to note that just because a contract is legally enforceable doesn’t mean its terms and conditions favor your company.

In fact, it’s a common error for a do-it-yourself entrepreneur to patch together legal clauses found online or get a contract template…only to discover later on that the terms and conditions are legally binding but heavily favor the other party to the deal.

Why? Because the drafter didn’t understand what really needed to be put into the agreement to protect the company.

Related Article: Business Contract Template – The Pros And The Cons

Business Contracts Lawyer Mike Young fixes flawed agreements so that companies can better protect themselves in future deals using the agreements. In some cases, it makes more sense financially to get a better contract than try to patch a flawed one. In those instances, Attorney Young drafts business agreements designed to be legally binding and advantageous to the client for a flat fee.

Author Mike Young, Esq.

Mike Young has been practicing business and technology law since 1994 and is an angel investor in startups. He's been an entrepreneur since 1988. To get legal help from Attorney Young, click here now or call 214-546-4247 to schedule a phone consultation.

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