The Art of the Deal: How Savvy Business Owners Safeguard Their Ventures

Don’t let your business get ruined by expensive legal fees.

Contracts are like insurance policies for business deals. Unfortunately, contract disputes are one of the most common ways companies bleed money.

In fact, almost half of all small businesses have an active lawsuit against them.

But wait… There’s more.

Most contract disputes are completely avoidable.

The law of breach of contract covers everything business owners need to know about enforcing agreements and punishing deal-breakers. By knowing the rules, entrepreneurs can save themselves thousands in attorney fees. Working with breach of contract lawyers early is one of the best investments business owners can make.

This article explains everything you need to know about protecting your business venture.

Table of Contents

1. What Breach of Contract Law Means
2. Examples of Common Contract Disputes
3. Tips for Creating Strong Agreements
4. When to Seek Legal Assistance
5. How to Protect Your Business Going Forward
6. Wrapping Up

What Breach of Contract Law Means

A breach of contract occurs when one party doesn’t hold up their end of the bargain.

Simple enough.

But did you know…

The law distinguishes between several types of contract breaches:

• Material breaches: When one party receives significantly less benefit or a more burdensome deal than they contracted for.
• Minor breaches: Also known as partial breaches. These occur when some, but not all, of a contract’s terms are broken.
• Anticipatory breaches: When one party alerts the other that they do not intend to live up to their obligations.
• Fundamental breaches: A breach that permits the non-breaching party to terminate the contract.

Why does this matter?

The type of breach committed can affect what remedies are available to the wronged party and the amount of damages that can be recovered.

Contract disputes cost businesses up to 9% of yearly revenue. Money that could be invested back into the business is thrown away fighting lawsuits.

Examples of Common Contract Disputes

Contract disputes can happen to anyone. Here are the most common types of contract disputes small businesses will face.

Payment disputes

One party fails to pay on time — or at all. Late payments can cause serious cash flow problems.

Failure to deliver

Products or services aren’t delivered as promised. The business paid for something it never received.

Issues with quality

What was delivered is of poor quality or doesn’t meet specifications from the contract.

Breach of confidentiality

Trade secrets are exposed. Confidential information gets leaked to the public or a competitor.

Non compete disagreements

Former partners or employees compete directly against previous agreements.

Depending on the situation, some of these issues can be resolved without legal involvement. Others require immediate assistance from a lawyer.

Tips for Creating Strong Agreements

The easiest way to win a contract dispute is to not let one happen at all.

Well-written contracts prevent issues from ever developing. If you want your agreements to be bulletproof, keep these tips in mind:

Use clear language.

Unclear or vague contract language is the number one source of disputes. All contract obligations should be laid out clearly in language that can be easily understood. Both parties need to know exactly what they’re agreeing to.

Define performance expectations.

What does your contract consider “good quality”? When does a project get deemed complete? Specify these details in the contract itself. Set metrics, deadlines, and concrete standards that remove ambiguity.

Set Payment Expectations

When should payment be made? What are the penalties for missing a deadline? Specify due dates, amounts, and late fees.

Define how disputes will be resolved.

Will the parties go to court? Use mediation? Arbitration? Decide how disagreements will be handled before they happen.

Define how the contract can be terminated.

Under what circumstances can either business walk away from the agreement? How much notice is needed? What happens to pending obligations?

Include a force majeure clause.

Things out of your control happen. A force majeure clause defines what occurs if unforeseeable events impact the contract.

When to Seek Legal Assistance

Here’s a hard truth…

The longer you wait for legal advice, the more damage is done.

At the first sign of a contract problem, it’s time to speak with a lawyer. An experienced attorney can nip small issues in the bud before they become a big lawsuit.

Business owners should seek legal assistance when:

• They’re asked to sign a large contract
• The other party stops responding to communication
• Contract deadlines are missed repeatedly
• The amount of money owed is greater than the business can afford to lose
• A formal threat of legal action has been received
• Private information has been compromised

Proactive legal care prevents bad situations from becoming lawsuits. A few hundred dollars in attorney fees now can save tens of thousands of dollars in legal fees later.

How to Protect Your Business Going Forward

Protecting your business takes work. You can’t set your contracts and then forget about them.

Hold all agreements in writing.

Don’t trust anyone’s word. Make sure there’s a written record of every agreement your business makes. This includes emails, texts, or handwritten notes.

Review your contracts annually.

Your business doesn’t operate the same way when you first start as it does today. Contracts should be reviewed every year to ensure they still make sense.

Train your employees.

If your employees can sign contracts, they need to understand the law. One careless employee can ruin a business.

Get to know your contract partners.

Strong business relationships can lessen the likelihood of contract disputes. When both parties have an established trust, they’ll work through issues instead of lawyering up.

Purchase insurance.

Business liability insurance can cover legal fees if you get into a dispute. It’s like a safety net for your business.

Wrapping Up

As you can see, properly safeguarding your business venture takes knowledge, planning, and resources. But the costs of dealing with contract disputes far outweigh investing in yourself and your company.

Here’s what you should remember:

• Put everything in writing
• Have clear, specific contracts from day one
• Don’t ignore potential problems
• Seek legal guidance if something feels off
• Review your contracts annually

Business owners who know how to protect their interests take steps to prevent lawsuits before they happen. By planning ahead and knowing when to ask for help, entrepreneurs can focus on what they do best – growing their businesses.

Allow your savvy at the “art of the deal” to continue protecting you long after your first contract is signed.