For many businesses, working with contract attorneys is an afterthought. Worse yet, many small business owners make the mistake of believing that legal advice is something one must wait until after a certain level of scale has been reached to implement, and this is just untrue. By partnering with an experienced contract attorney often and early through the formation or expansion of your business, you can actually protect your business as it grows to the size you’re envisioning.
Often, one of the most commonly signed (but generally unread) contracts that business owners slip up on is vendor contracts. While a vast majority of the businesses you may partner with are reputable and will not try to take advantage of a contract slanted in their favor, there are some vendors that will include unfavorable provisions for your business in their contracts. Signing a bad contract, particularly without reviewing it first, could endanger the future livelihood of your business. The following are steps you should take with every new vendor contract to protect yourself and your business.
Step 1: Read The Contract
The first thing you should do once you receive a contract from a vendor is to grab a cup of coffee, sit down at your desk, and read the entire contract; yes, even the fine print. Nearly every contract is different; it will vary depending on the industry, the size of the deal, and the parties involved, but there are still some major similarities—the basic terms of the deal, and the boilerplate clauses. As you read the contract, pay extra attention to the specifics in order to ensure all of the terms you agreed on actually made their way into the contract. Don’t rely on the other party saying they will just add something later; make sure every term is actually written in the contract before you sign it. Also, don’t forget to check that the basic information is correct such as the date, party names, and signature lines.
There will also likely be plenty of contract boilerplate (standard contract clauses); don’t skip over them because you will be legally bound to those provisions as well. Boilerplate sections may include clauses on severability, attorney’s fees, notice, forum selection, etc. Some of the boilerplate may be straightforward and easy to understand, but many of the terms may appear as incomprehensible jargon—this is where you may need advice.
Step 2: Take Notes
As you read the contract, jot down anything that looks confusing, incorrect, or unfamiliar. Make sure to note what it is about that section that caused you to flag it—maybe you weren’t sure if the clause was favorable to you or the other party, there could be an inconsistency between clauses, the numbering or reference may be incorrect, or it may be something you have never seen before and want to make sure you fully understand the meaning of. Once you have your list of flagged items, you are ready to reach out to get help clarifying and fixing the contract with a trusted resource: your business attorney.
Step 3: Call Your Attorney
As the owner of a business, you should always have someone you trust with your legal matters. A business attorney can help you review and revise your vendor contracts, answer questions about the contract, and make sure your interests are protected.
Please give us a call at Coepio Legal today to see if we may be able to assist with your vendor contracts. Remember, it’s never too early (or too late) to seek legal help with business contracts. Call us now to schedule your free initial consultation!