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How can you reduce the risks of contract disputes?

Aligning business agreements with long-term company goals can create the foundation for sustainable relationships. Forming mutually beneficial contracts should begin during negotiation.

When you recognize the gravity of negotiation, you can use it to your advantage and better control the risks of forming a new relationship.

Take your time

Creating a new business contract is a process that requires time, careful planning and prompt follow-up. According to Harvard Law School, one of the top three mistakes you could make when drafting a new agreement is to rush the process. Speeding through the legalities can substantially increase the risks of a dispute occurring later on. Especially if you overlook critical components during contract formation.

From the start, express your desire to create an agreement that everyone understands and benefits from. Allow ample time for negotiations to happen. Encourage participants to voice concerns and suggest solutions for potential issues that may arise. Identify common objectives and determine which outcomes will provide optimal benefit for everyone involved. Recognize the value of contract drafting and refrain from signing formal documents until everyone agrees on the terms and conditions.

Prioritize communication

Communication is an excellent way to resolve misunderstandings before they undermine crucial business relationships. When you begin forming a new contractual agreement, articulate clear guidelines for communication. At any sign of non-compliance, immediately communicate your concerns to correct the issue before it worsens. When everyone feels that their feedback provides value to the relationship, everyone may feel more inclined to communicate.

A contract dispute can wreak havoc on organizational workflow and success. Effective contracts require persistent effort and maintenance. Carefully observing best practices for writing and maintaining contracts can help you minimize the risks of a costly dispute happening.