How To Avoid Breach-Of-Contract Lawsuits In Your Business

As a business manager, you should be concentrating on improving your productivity and revenue rather than dealing with lawsuits for breach of contracts. Unfortunately, that won't be the case if you don't take active measures to prevent contract-related lawsuits. Here are some of the measures that may help:

Insist On Formal or Written Contracts

Although oral contracts may be enforceable in your line of business, it's best to insist on formal contracts with each party with which you do business. The main reason for this is that an oral contract is easier to misinterpret than written contracts. With a written contract, you can refresh your memory of the terms and conditions at any time and you will always know what you are required to do.

Ensure the Contract is Clear

Another important tip is to prepare the contract as detailed as possible. It is better to have multiple pages relating to the same contract than to sacrifice clarity for the sake of brevity. In fact, if you aren't skilled in business transactions (say you are an inexperienced entrepreneur), you should have someone else draft the contract. Some people also rush into summarized contracts because "they don't have the time" to create a more thorough one; outsourcing the work may help you avoid such a mistake too.  

Deal With Miscommunications As Soon As They Occur

It's good to have a business lawyer go over your contracts before signing them; that way your lawyer will catch any errors or miscommunications in time. If you do realize that there is a miscommunication between you and the other party, take your time to address the issue as soon as possible. The other party is likely to be understanding if you act fast and clarify the issue before they can act on the miscommunication. For example, if you have realized that the customer talked about model X number of computers during your negotiations but indicated model Y in the contract, you should call them and get clarity on the model they meant.

Include Remedies Contract Violations

Lastly, you can also avoid lawsuits by including provisions for dealing with breach of contract when writing contracts. For example, you can include alternative dispute resolution (such as mediation) as the first option to take in case one of the parties breaches the contract. That can go a long way in limiting the number of contract-related lawsuits your business may face.

Hopefully, you won't be dealing with any breach-of-contract issues in the near future. If that does happen, however, consult a business lawyer as soon as possible to help you deal with it and mitigate the ramifications. Contact a commercial litigation attorney for more help.