4 Legal Aspects To Look Out For Before You Sign Any Contract !
As a nascent entrepreneur, the agreements and/or contracts that you sign at the early stages of your business play a pivotal role in ascertaining the success rate of your start up. Below listed are some of the key legal aspects which need to be kept in mind before you proceed with execution of any contract.
1. Authorise Signatory Of An Entity
Whenever you are signing a contract, either with Jaarvis or any other third party, make sure you are aware as to who the parties to such contract are. You should always bear in mind that you and your entity are different from each other to the extent that you will be personally ‘on the hook’ if you sign a contract in your personal capacity rather in the capacity of an authorised signatory of your entity.
2. Attention To Detail
Ambiguity undoubtedly results in disputes, therefore, it is imperative that you record every possible detail pertaining to the commercials of the transaction. Each party’s rights and obligations need to be clearly defined in order to spare no room for any kind of uncertainty. A good contract will always state very clearly what goods or services will be provided and when and how the other party will make payment. Let’s say your company wants to engage the services of a manufacturer to manufacture its products, in such a case it would be great to have all the design and feature specifications incorporated in the contract to avoid any dispute in the future. It is also essential to define the relationship the parties share pursuant to the execution of a contract for e.g. an agency, principal to principal, partnership etc.
3. Termination of the contract
A legally sound contract must always envisage a very clear term and termination clause disclosing the actual intention of the parties. Either party under the contract may have the right to terminate the contract with or without giving any cause or reason or the right to termination could be a unilateral right residing with any one party to the contract based on the understanding between the parties.
4. Dispute resolution mechanism
Having a clearly specified dispute resolution mechanism clause in a contract often turns out to be a blessing in disguise. Law suit or Litigation although might just be fancy words, however, if a contract anticipates that disputes will be resolved in court, the contract should specify which court will resolve any disputes in order to avoid being dragged into a court in a different city, state or country than yours.
Penny wise pound foolish, this English proverb often holds true in case of start-ups who try avoiding any attorney fees for reviewing a contract but eventually the small amount of money that you are trying to save might cost you a fortune. An attorney while reviewing a contract ensures that the legal nitty gritty is taken care of therefore seeking an attorney’s opinion on a contract before executing the same becomes indispensable.