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What are some business contract issues I should avoid?

When some people think of running their own business in Lexington, they think of the freedom and profitability it can give them. They may not consider how much work and time is necessary to be successful. Whether you plan to be the sole owner and operator or to work with a partner and hire employees, there are many issues you need to prevent complications and litigation. 

One area of importance involves contracts. In an ideal world, they would not be necessary because everyone would honor his or her word. They would not renege or encounter difficulties upholding their end of agreements. But in real life, contracts are necessary to protect your interests and hold people accountable for any agreements they enter into. A poorly crafted contract can mean trouble for you and your company. Take some time to review two of the most common mistakes that are made with contracts so that you can take measures to avoid them. 

Not clearly defining breaches and defaults 

It is important for you to create agreements that clearly outline the roles and expectations you have for your partners, vendors and any parties you work with. Those contracts should also include detailed information on issues that would make you want to terminate your professional relationship or contract. To ensure you do not overlook something that could lead to contract termination down the line, you should consider all possible worst-case scenarios. 

Lack of provisions for dispute resolution 

Not all business relationships work out. Sometimes issues can arise that lead to disagreements and disputes. Unresolved disagreements can cause problems for your company and lead to litigation which can be quite expensive. To reduce the chances of litigation, you should incorporate steps that you and the party that is in breach can take to resolve your differences. Mediation, negotiation and arbitration are cost-effective ways to put an end to contract and business disputes, states The Balance. 

Keep in mind that not all contracts are legally binding. It is possible to enter into a bad faith agreement with a partner or investor. Many entrepreneurs and startups find it beneficial to seek out legal assistance.

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