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ContractLaw“Cutting corners in a contract situation will often cost you more than had you invested initially in the proper documentation because legal cures are more expensive than legal prevention,” says Greg Clement, a partner with the California law firm of Burkhalter Kessler Clement & George LLP.

According to Clement, the importance of well-constructed contracts or agreements is clear. “It all stems from avoiding ambiguity, which is the curse of the small, unsophisticated business. When something is not in writing, it is easier for ambiguity” to occur, he says.

It is paramount that contracts are not only succinct, but also that all of its blanks are filled in. For example, a contract that does not clearly indicate purchase terms, cost to purchase inventory and delivery specifications is poorly constructed and will not afford an aggrieved party much protection if a breach occurs.

Contract templates

While Clement advises entrepreneurs to hire an attorney to write necessary contracts, he says there are a few other places business owners can look to find what may be viable examples.

One such place is a trade association pertaining to the industry a small business is in. Online short cuts, such as Rocket Lawyer, sells forms that “have a better chance being applicable for your use” than many other outlines online, says Clement.

That being said, Clement cautions against using those legal templates found online.  “Finding and using your own contract is akin to a game of Russian Roulette. You’re either going to breathe a sigh of relief or blow your brains out,” he says.

Since contracts are at the heart of a successful business, Clement says it’s simply a best practice to hire a lawyer to ensure a contract conveys all parties intended.

“When you don’t have terms in writing, disputes are often resolved by what people can prove happened even if that’s not the reality. Lawsuits involve burden of proof and sometimes, you don’t have all the evidence,” he says. If that happens, a case is often based solely on the credibility of witnesses. Moreover, witnesses relocate or simply cannot be found, further hampering the likelihood of a successful prosecution of case stemming from an alleged breach of a poorly constructed or absent contract.

“Sometimes, out of sheer stupidity, people hang themselves with poorly drafted documents,” laments Clement.

Tami Kamin Meyer is an Ohio attorney and writer who tweets as @girlwithapen. She is Chair of the Marketing Committee of the American Society of Journalists and Authors.

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