* indicates required

Drawing up contracts and avoiding conflict

By Christopher Cox
Cox Minhas & Co

IT’S beginning to happen… business is alive and moving forward at a pace. This is probably old hat but worth repeating. There is plenty of room for conflict so take a moment to avoid it.

This is particularly true of the commercial world, which is more intricate than ever before, with complicated dynamics and vast numbers of unknowns that did not exist until recently.

Litigation can sound the death knell for any business, large or small, not just in terms of the unavoidable costs, but due to the disruption to operations, morale of the team and reputation. Litigation-proofing your business is critical, particularly for start-up businesses that may have been founded on a back-of-the-envelope deal.

As a litigation lawyer, I have learnt that anything that can go wrong will go wrong and it will usually do so at the worst possible time. I have also seen that the common factors that give rise to contractual disputes could often have been easily avoided with a little more care. So, looking at the this problem with the benefit of 20-20 vision, how are disputes best avoided?

My advice for start-up businesses on how to avoid contractual disputes are as follows:

* Do not rely on oral agreements

* The devil really is in the detail

* Think about choice of law and jurisdiction

* Thing about security and reserve title to goods until payment is made

* Take out insurance to cover disputes so your negotiating power is improved by knowing you have insurance backing.

* Be wary of contracts created inadvertently. All you need is offer, acceptance, consideration, intention to create legal relations and certainty, and those factors can all arguable occur too easily when what you should be saying is that discussions are all ‘subject to contract’

* Pay for proper drafting – prevention is better than cure

* Carry out due diligence on the party with whom you are contracting

* If you are already in a contract be wary of attempts to change terms. Why swap a letter of intent contract for a contract signed at the end of the works which has retrospective effect?

* If a contract refers to other documents don’t sign the contract until you have read the other terms

* Some contracts, such as construction contracts have terms imported into them by statute so what you are reading in your contract is not necessarily the whole story

* Think very hard before signing a contract that limits rights to claim both in time or to exclude the right to claim back

Good luck and best wishes!

Christopher J. Cox is a senior litigation lawyer and registered mediator with 38 years’ experience spanning banking insurance property company and construction law. He is a director at Cox Minhas & Co Limited, a niche law firm based in Brixworth, specialising in property law in all of its aspects. If you need serious help why settle for less.

For more information contact Cox Minhas & Co on 01604 973975.

Companies mentioned in this article

More from Daventry: