Business and commercial contracts play a critical role in the economy. Businesses and individuals engaging in commercial transactions almost always have a contractual agreement in place that governs the transaction. Contracts can provide a clear understanding of the parties’ respective rights and obligations. Careful negotiation and drafting can ensure that parties have a comprehensive agreement that reduces the risk of misunderstanding or legal disputes.
For nearly two decades, the legal team at Gearhart Law has assisted clients ranging from individual entrepreneurs to international businesses with their contract needs. We use our in-depth knowledge and experience to craft innovative, tailored legal solutions that help you achieve your goals. Our hands-on approach to legal representation means you will always have access to the lead attorney working on your project. Contact us today for a case review to discuss your legal options in your contract matter.
Understanding Business & Commercial Contracts
Business and commercial contracts give entrepreneurs and corporations the foundation to succeed financially. Contracts that govern business and commercial transactions can provide certainty and stability in your operations. Contracts ensure that each party understands their rights and obligations. While parties typically have wide latitude to define the rights and rules in their commercial relationship, business contracts must comply with applicable laws, tax regulations, and industry standards.
Careful contract drafting will help ensure that business agreements serve the primary goal of defining a business relationship and providing clarity to parties’ rights and obligations. Unfortunately, oversights in contract drafting or ignoring the effects of state, national, and international contract and commercial laws can lead to contract disputes, and potentially to breach of contract litigation.
Types of Business & Commercial Contracts We Can Help With
At Gearhart Law, our experienced business and commercial contracts attorneys can help you negotiate or resolve disputes over commercial agreements involving:
- Purchase and sale agreements, including supplier agreements and sales contracts
- Commercial leases
- Service agreements, including master service agreements and statements of work
- Intellectual property agreements, including licensing and assignment agreements
- Asset purchase agreements
Key Provisions of Business and Commercial Contracts
A valid and effective commercial contract must address several critical matters.
Parties
Contracts must specifically identify the parties to the contract. Any party not named in the contract typically cannot claim the benefits of the contract or have any obligation to fulfill performance requirements. The contract can also limit parties’ ability to assign rights or obligations under the agreement. Contracts can also name third-party beneficiaries who, though not formal parties to the agreement, can pursue legal action to demand the performance of specific contractual obligations.
Consideration/Payment Terms
A contract requires the parties to agree on consideration or the value exchanged for the benefits of the contract. Consideration can take the form of money or mutual performance obligations. When one party exchanges money for goods or services, the contract should also establish payment terms and pricing structures.
Performance
Contracts should also outline the obligations each party must perform. Contract provisions can set standards for what constitutes adequate performance under the contract or what may qualify as a breach of the contract. Parties should also agree on deadlines for performance and incorporate “time is of the essence” provisions to avoid questions over deadline flexibility. Without clear standards for performing contractual obligations, parties can quickly get into disputes over whether one or both sides have breached the contract.
Alternative Dispute Resolution
Despite parties’ best efforts at negotiating and drafting a contract that can prevent future issues, contract disputes still arise in commercial transactions. Businesses frequently want to avoid the time and expense of traditional litigation and may prefer to incorporate alternative dispute resolution procedures in their contracts. ADR provisions in a commercial contract may require the parties to attempt mediation of contract disputes or submit disputes to binding arbitration. Alternative dispute resolutions allow businesses to resolve disputes quickly, privately, and at less expense than filing a lawsuit.
The Contract Negotiation and Drafting Process
Using clear, precise language in contracts can help minimize the risk of contract disputes or breaches. The contract negotiation process should ensure that parties have an agreement customized to their goals and unique needs. Commercial contracts should fairly balance each party’s interest — a one-sided contract has a high risk of causing the disfavored party to become dissatisfied with the agreement or ultimately breach their contractual obligations.
Effective contract negotiations begin with understanding the needs and objectives of each party. By seeing things from the other party’s perspective, you have a better chance of understanding their contract demands, which may help you find unique solutions to resolve impasses in negotiation.
Experienced legal counsel can help you achieve an optimal outcome from the contract negotiation and drafting process. An attorney can evaluate contract proposals to determine whether they help meet your business’s critical needs and reasonable expectations. Legal counsel can also help you write a well-drafted contract that minimizes uncertainty.
Remedies to Enforce Contracts
Once you’ve written and executed a commercial contract, that doesn’t mean the end of the contracting process. Your business should undertake regular contract reviews to ensure that your agreements comply with updated laws and regulations and continue to meet your business’s needs and goals. The review process can also alert you to potential noncompliance by another party to a contract.
When a counterparty to your business contract has breached its obligations under the agreement, you may have various remedies available to your company. The contract may describe the remedial process for breaches, such as notice-and-cure provisions allowing non-compliant parties to remedy a breach. Your company might pursue informal settlement negotiations or alternative dispute resolution mechanisms to pursue a breach of contract claim. Alternatively, you may file a lawsuit to seek remedies from the courts, including financial compensation for your company’s economic losses or, in rare cases where financial compensation is inadequate to remedy the breach, a court order requiring the breaching party to perform their obligations under the contract.
Contact Our Firm Today for Experienced Legal Advice for Your Business or Commercial Contract
When negotiating a commercial contract or finding yourself in a contract dispute, you need seasoned legal guidance and advocacy to protect your business’s rights and interests. Contact Gearhart Law today for a confidential consultation with an experienced contract lawyer to discuss your situation and options.