“Litigation is evil and should be avoided at all costs.” My Contracts professor stated those words on my first day of law school. Turns out, he was right. Litigation is not only incredibly expensive, but also terribly unpleasant for all involved. Complaints, Answers, Interrogatories, Requests for Production, Depositions, Motions…litigation seems never-ending. And when it finally does come to an end, no one truly wins due to the financial and emotional toll the litigation process takes on you. For a business owner, litigation can be even more devastating. It can not only obliterate your balance sheet, but also snuff out your life’s work and your reputation along with it.
How can you avoid the evils of litigation? One way is to implement solid contracting practices. Well-drafted contracts should include a number of litigation avoidance provisions such as cure provisions, dispute resolution provisions, indemnities, disclaimers and intellectual property rights. Equally as important, the business terms of the contract should be well thought out and carefully worded.
Specifically, the business terms should be objective and concise, especially when describing your service or product and committing to what you will deliver. To the fullest extent possible, your service description should not leave anything open to interpretation beyond what you intend it to convey. You should not assume the other party (or worse yet, a judge or jury) will fully understand your service description by haphazardly throwing together a few cryptic bullet points, littered with marketing fluff and puffery. Marketing jargon has its place, it’s just not in your contract.
When it comes to your contract, you want your service description to convey exactly what it will deliver, and nothing more. Here are a few helpful tips:
- Steer clear of using subjective descriptors like “high quality,” “best-in-class,” or “optimal performance” to describe your service. Whether your service truly meets any of those descriptions is subjective and sets you up for a potential breach of contract claim.
- Do not insert illustrations or diagrams into your contract. As the adage goes, a picture is worth a thousand words, and that’s precisely why pictures do not belong in your contract. You want a limited and concise description of your service that leaves nothing to the buyer’s imagination.
- Do not use your sales and marketing proposal as your actual contract – it’s a recipe for disaster, especially if it is loaded with marketing puffery. A proposal and a contract are two entirely different business tools, utilized to achieve different objectives. A proposal markets and sells your service. A contract memorializes, with legally binding effect, exactly what your service will deliver. The two should generally not be intermingled without careful consideration.
Sensible contracting is the key to protecting you and your business from the evils of litigation.
Hunter Business Law can help protect you and your business from unnecessary legal strife. If you want to prevent a subjective and overly descriptive contract from de-railing your entrepreneurial aspirations, then contact us. We’ll put our contracting expertise to work for you.
This Blog was written by Hunter Business Law, Attorney Elisa Keller. View her profile HERE.
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