R U O Y G N I T I AUD S N O I T A G I L B O R E M I R P W A L T C A R T ON
C O R E Y D AY C RASICH & R A M Y B N WRITTE
inter’s over — the birds are singing, the flowers are blooming, the distillate is flowing, and you’re looking to scratch the spring cleaning itch. While contemplating the manual labor of deep cleaning the distillery, you may be ignoring less obvious concerns. Growing up, my nana always told me, “Nothing says spring cleaning quite like auditing your business’ contractual obligations.” Alright, she never said that, but it’s still true. Now’s as good a time as any to review your current, pending, and planned contracts to ensure you understand what you’re agreeing to do, what you’re entitled to, and why all that fine print matters. First, an aside: Whether you know it or not, you can make an agreement without spelling it out in a written contract. A handshake deal can — with certain exceptions — be binding. The issue with unwritten deals is that when they do not go as planned, enforcing the deal can get expensive very quickly. When that happens, both sides will spend significant time and money for a court to determine which parties’ version of events is most credible. Certainty, or as close as you can expect to get to it, is why you should always set pen to paper and write out your agreement. Alright, you’re convinced, you’re only going to make written contracts going forward. That’s good. Odds are you have a rosy outlook on, and high hopes for, the business relationship with the other party to your deal. If you didn’t, you’d probably be looking to work with someone else. However, based on being brought in to litigate contract disputes (well after the rose has wilted), there is nothing more important than understanding what you’re agreeing to from the get go so you can properly assess your liability. Having an attorney draft, or at a minimum review, your contract might be better, but I recognize that’s not always an option.
SOME IMPORTANT CONTRACTUAL TERMS TO UNDERSTAND (i.e. WHAT YOU’RE AGREEING TO)
TERMINATION CLAUSES specify how, when, and under what conditions a party can end the agreement. This is also the place to spell out any consequences for early termination. These are often coupled with liquidated damage terms (a predetermined amount the parties agree the contract is valued at). INDEMNIFICATION AND/OR A DUTY TO DEFEND TERMS are used to determine responsibility for certain costs arising from the contract. These costs can include settling claims and attorney’s fees necessary to defend the claims. CHOICE OF LAW/FORUM is useful when parties reside in different states. The parties agree contract disputes will be determined under the laws of a specific state. The parties can also agree lawsuits arising from the agreement will be brought in a certain state. This simplifies questions over how a provision will be read and gives the parties more certainty.
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