When it comes to writing a contract, you can draft one yourself or have solicitors produce one for you. We look at the dangers involved in drafting your own contract and what to look out for.
The complexity and importance of the contract will determine whether or not you seek legal advice on a new contract. We would recommend drafting bespoke commercial contracts or having the other party’s terms professionally reviewed if there is any doubt but for smaller matters, you can use a good standard set of terms and conditions as a point of reference.
If you are writing your own contract then you should include the ‘who, what, when, where and how’ of the contract. You should definitely ensure that you make things as certain as possible and avoid anything that says “to be agreed”.
Business to business contracts
In the business to business (B2B) world you get a lot more freedom to a contract. As long as both parties are of fairly even footing in terms of bargaining power, you can do a fair amount of what you like.
Danger can lie ahead if you haven’t been specific enough in your contract and disagreements can surface. From a B2B perspective you might not be able to enforce a particular right you thought you had. You might think you were entitled to withhold a payment or get a particular damages settlement and that might have implications for your cash flow.
Business to consumer contracts
If you are dealing in a business to consumer (B2C) world there’s very strict restrictions in terms of what you can do in consumer contracts. There is law in place as to how far businesses can limit their liability, how far they can change the terms of the deal, or update them.
Writing your own contract would require a lot more care in B2C contract as there is a lot more legislation governing the relationship.
We see a lot of contracts that are not entirely enforceable. These unenforceable terms in the contract may be in place as a deterrent. For example, there may be a commercial objective behind them, which is why the unenforceable terms are put in but you should know the legalities of all your terms.
The general rule is, if your B2C contract looks unbalanced to the detriment of the consumer you may well have terms that are not enforceable.
Try to avoid disputes
If contractual disputes go to court, there could be a costly court settlement and if that goes all the way to trial, there might be expenses and that could be extremely costly in monetary terms and time wasted.
The key is to try to get a good understanding of where you stand so that you can make a decision of whether you want to fight or you want to settle and extricate yourself from the situation as quickly as possible.
Disputes may lead to wider issues, the worst case scenario in B2C contracts is that a business may be reported to a regulatory organisation such as an ombudsman, trading standards, their local authority or the Advertising Standards Authority, which may well result in fines, adverse publicity and blacklisting. This could potentially ruin your good business name that has been built up over a considerable amount of time and will be hard to recover.
How can we help?
If you have written your own contract and it is not correct, or you are involved in a contractual dispute, the earlier you get solicitors involved, the better. We can steer you down the right track, first time. Data protection is especially important and getting ever more complicated with larger fines and more regulatory action being taken; if you start getting out of your depth, it is time to get help from our experts.
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