As a business owner, your primary objective is running your business and serving your clients. The last thing you need is a messy contract dispute, which can lead to expensive litigation and broken business relationships.
Fortunately, there are steps you can take to minimize the risk of contract disputes.
Carefully drafted contracts
The most common cause of contract litigation is confusing and unclear contract language. Unclear language invites confusion and disputes about the parties’ rights and responsibilities under the contract.
It is also important to maintain open lines of communication regarding a contract and the parties’ performance under the agreement.
Lack of communication breeds mistrust and misunderstandings. Open communication will not only help avoid contract disputes, but is also an effective way to maintain positive business relationships.
Documenting communications and any changes in contract terms is also important. If the parties agree to change a term of the contract, make sure the change is documented in writing.
If an informal understanding develops about how to perform under the contract that is inconsistent with contract language, the parties should document that understanding by executing a contract amendment.
Ensure contract terms comply with law
It is also important to ensure the terms of a contract are consistent with law. Kentucky law, for example, requires certain home repair or home solicitation contracts contain language stating that a consumer has three days to cancel the contract.
Failing to include required language may invite disputes or nullify parts of the agreement.
Get assistance from an attorney
An experienced attorney can assist in drafting contracts and establishing procedures to minimize the risk of contract disputes. If a dispute does occur, an attorney can also advise on your legal options and how to protect your business interests.