Negotiating A Good Contract
By: Julie Kreutzer, Esq.
A good contract spells out what each party to the contract will do for one another so that you start off with a clear understanding that sets you up for a successional venture, avoids conflict and protects you if the deal doesn’t work out. Here are some pointers for drafting or reviewing a contract:
- Specify in the contract that this is the only contract and any other agreements need to be in writing. This puts both parties on warning that any changes need to be handled in writing and allows you to avoid the danger that someone will claim there are oral contracts besides your written contract.
- Specify in the email sending the contract for signature that you not only want the signed contract scanned and sent back to you but that you want a hard copy sent to you with original signatures for your file. Although getting a notary public for signatures is a nuisance, it also protects you in the event that the other party develops a convenient memory about signing the contract. If you’re signing in person, make a note in the file that there was an in person meeting to review and sign. If you’re doing it by mail, do a cover letter that specifies you need the original signed document sent back to you.
- Be highly specific in your contract as to precisely what you and the other party are agreeing to do. If some of the terms aren’t figured out yet, either delay signing until they are or state which items are agreed to now and specify that future terms will also be done in writing for other issues that might come up in the future.
- After the contract is signed, be aware of changes in the deal that require changes to your contract. Changes are fine as long as they are put in writing and agreed to with both parties signing. Agreeing over the phone may be quick, but it often results in miscommunication and sometimes, lawsuits.
- If you have a corporation, be sure to use the full corporation name in correspondence, including emails, and in the top part of your contract as well as the signature, which needs to show your title so that it’s clear you are signing for your corporation. It’s fine to mention the name your business is known by in parenthesis. Your standard email should be set up so that it has an electronic signature with your name, title and your corporation underneath that goes out with every email. Although failure to do this doesn’t guarantee a loss in court, it is one of the factors that can be used against you.
- Whether you’re drafting or reviewing a contract, have an attorney take a look at it to make sure it works for you. The two issues are: 1) what’s missing; 2) language that might be difficult to follow or have a different legal meaning that is dangerous to your interests.