Business Contracts

There is no such thing as a Standard Form Contract

All businesses have contracts. Whether it is an oral agreement or a 60 page-written document, there are substantial legal issues. Most small business owners do not even recognize they are entering into a binding contract as part of everyday business. Did you actually read the fine print on the back of the last purchase order? What about that Standard Form lease. Or, a “simple” LLC?

Contracts can be Negotiated

A contract can be simple or complex but they are all equally binding. The other business might try to convince you to sign an agreement because “it’s a Standard Form.” There is no such thing! We can negotiate all agreements. If the other side refuses to budge on some unreasonable terms when you are negotiating the agreement, imagine how they will be when the contract is underway and there is a dispute!

Remember, no matter what the contract says, one side is going to be liable if something goes wrong. Usually, each side thinks they are right and often the actual wording of the contract decides.

Disclaimers and Hold Harmless Clauses

Although there are many ways to make sure the contract represents your interests, your attorney will address two protections when drafting contracts:

1. Disclaimers: Getting Rid of Guarantees
Disclaimers are a good method of limiting liability. The idea of a disclaimer is that you will do business with the other party but you do not guarantee that nothing will go wrong. If something does go wrong, your obligations are defined in the contract. A disclaimer lists things the contracting Party cannot be held responsible.

2. “Hold-Harmless” Provisions: Your Protection
The hold harmless provision is the other side of the disclaimer. While the disclaimer states you only are limiting your liability for bad results, the hold-harmless clause defines which side is responsible when something goes wrong.a lawsuit?

The disclaimer states you are limiting your promises. The hold-harmless provision transfers responsibility by having the user positively assume the risk. Finally, an indemnification tied into the hold-harmless clause shifts financial responsibility to the user if the provider gets sued.

How can a Lawyer Help?

Disclaimers and hold-harmless provisions are part of general risk management. You need legal advice about the actual contract language, particularly the wording of disclaimers and hold harmless provisions. Your attorney will address:

What they protect (such as damage or monetary losses).
If the protection extends to others who rely on the information.
Mistakes or omissions that they do not guarantee.
Positive requirements that the customers must do.

Important Note:

Although contract language and good legal advice can help you to be careful in your transaction, making sure customers are satisfied and carrying adequate insurance, can help protect you from litigation and unnecessary financial risk if something goes wrong.