Contracts govern almost every aspect of business- or at least they should. However, sometimes even experienced business owners come to agreements with employees and clients that are not founded on contracts with “established terms”. Essentially, established terms mean written clauses that give a clear indication of legal rights and obligations.
It’s easy to establish informal agreements with implied terms, and this can work short term. The problem is that it makes it difficult for all parties to enforce their rights should something go wrong. Here are a few reasons why it’s so important to have contracts with established terms.
Established terms act as proof
While human memory is efficient, it is not foolproof. It helps to have things written down so that all parties can double-check where they stand. Should a dispute arise, looking back on the contract can soon clear matters up. The evidence is there in writing and both parties have signed up to it.
Terms need to be enforceable
While verbal and other informal agreements may technically be enforceable, this is not easy in practical terms. If a court or arbitration service is placed in the position of having to choose one party’s word over another’s, without documents to examine, they may not be able to come to a ruling. Contracts with established terms, on the other hand, can be carefully examined and the law applied thereafter.
It’s wise to utilize contracts with established terms in any aspect of business. To ensure that your contracts are watertight, it can help to have legal guidance behind you. We help business owners create contracts or settle disputes, call us today for a consultation.
