Shortcuts in Business Contracts: Penny Wise and Pound Foolish
In today’s uncertain economy, marginal increases in revenue or minor reductions in expenses can noticeably improve the bottom line of a small business. However, many small business owners in Northern Virginia attempt to cut costs by managing their commercial contract drafting or negotiations without an attorney, an ill-advised attempt at cost-cutting which often backfires.
Whether negotiating a commercial lease, a promissory note, a distribution agreement, an asset purchase agreement, or a joint venture agreement, consulting with an attorney early in the process will likely save you money and help avoid headaches both during the negotiation process and during the term of the agreement.
Many small business owners or entrepreneurs are tempted by the thousands of easily obtainable agreements online, and in fact, many of these agreements are indeed professionally and expertly drafted—but for different parties dealing with different and unique circumstances, often in a different state or legal jurisdiction. Since the addition or omission of a single word or sentence can often radically change the meaning or enforceability of an agreement, attempting to modify and utilize these agreements without professional assistance can end badly.
The attorneys at PJI Law have seen countless commercial agreements that omit critical provisions which should always be included, as well as agreements made by individuals when the parties should be corporate entities, or agreements made by corporate entities which have been dissolved or have never existed to begin with. We often find ourselves helping clients who had poorly drafted agreement resolve contract disputes at a far higher cost than the small upfront investment in legal guidance that would have likely prevented such problems from arising.
When both parties are represented by counsel and the attorneys drafting the agreement have a clear understanding of their clients’ desires and concerns, the process can become streamlined and efficient. An effective commercial contract can save even a very small business tens – or even hundreds – of thousands of dollars by helping to reduce the likelihood of problems arising and minimizing the damage in the event that problems do arise – whether from breaches, negligence, liability, or indemnification issues.
Finding ways to cut costs in your small business is absolutely critical for success and survival, but business owners should think twice before trying to save money by taking shortcuts with their commercial contracts. No one wants to reach a point where they realize they were penny wise and pound foolish.