Places You Should Check in Every Contract

By | August 6, 2013

When you’re running a small business, you have to handle a lot of things on your own while also balancing a tight budget. One of the first places you may be tempted to cut expenses is in hiring an attorney on retainer. Attorneys on retainer can be quite expensive, but just because you have not hired one does not mean that you will not need one or run into legal issues.

The most common legal issue that business owners run into are in the contracts that they sign. In fact, you can make or break your potential case later on based on the contract you put your signature to. Here are some places you need to always check to make sure you aren’t inadvertently signing away your rights.

Dispute Resolution

A growing number of businesses have started shifting toward arbitration and mediation as the preferred means for dispute reconciliation. When it comes to running an LLC or a corporation, you don’t want to spend any more time in a court system than you have to to resolve your business’s problems. However, you need to make sure of a few things in this case.

First, make sure that you are not agreeing to binding arbitration without a say in the arbitrator. Often times, slick businesses will slip this term in. They get to choose the arbiter, and you will not be able to take the suit into court because you have waived the right to a court hearing. Arbitration is not a bad thing. It can make the process go significantly faster and get the resolution that you and the other side needs. You need to make sure that either the arbiter will be chosen by a neutral party or that you will have a say in who the neutral party will be.

Second, you need to make sure that you are not waiving your right to legal counsel. You should always retain the right to have an attorney present, even if you are going to deal with things on your own or have no intention of hiring an attorney.

Acceptance by Silence

Look specifically under the  terms for acceptance. Most of the time, you cannot be held as bound to a contract if you are silent. The law requires some indication that you have assented to the terms. However, if the contract states that you are willing to assent to the terms by silence, then that means your silence means you have accepted. This is a very difficult clause to break. You do not want it in there at all.

Having a term that says in certain situations silence may be deemed an acceptance is sometimes all right. Generally, this occurs in situations when you have not cancelled the agreement and an automatic renewal provision has gone into effect. These are not problematic. What is problematic is when a blanket silence can be seen as an acceptance. You will have a difficult time getting this clause removed later.