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Common contract mistakes

On Behalf of | Mar 3, 2022 | Business Formation & Planning |

While there are still some who prefer to do business based on a handshake agreement, more often, you may choose to have a contract. Contracts have the distinct advantage of being a formalized writing that memorializes your agreement.

However, contracts can come with their own challenges. Simply having a contract is not enough. The agreement must have appropriate terms that both parties understand before agreeing and moving forward to completing the contract.

These are some of the most common mistakes when creating a contract.

Using a template

There are thousands of templates online, and it can be tempting to skim through one and simply copy and paste the content. You may be trying to save time, money, or both, but using the wrong template can become costly in the long run.

Templates are not designed to stand on their own. If you are going to use a template, you will need to take the time to edit it. Editing the template language means making sure you understand the terms and which ones apply to your situation. It is often best to talk to a skilled professional to help you create the final draft of your contract, so you have an enforceable agreement.

Moving forward without understanding

By the time you and the other party have talked about terms, you may both be eager to move forward with signing the contract. During the signing, you may feel pressure to sign without reading and understanding all of the terms.

In some cases, you may hear phrases like “it’s just boilerplate” or “this is just a formality.” Agreeing to terms you do not understand can lead to costly issues later if you accidentally violate a term that you did not realize was in the contract.

Contracts are important documents, and it is critical to have support both creating and understanding them. You should talk to an experienced professional about the agreement you intend to make.