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As a business owner, you know the importance of negotiating and finalising commercial contracts with other companies. Naturally, there are many steps before arriving at the final written agreement, including negotiation, review and signature. Furthermore, as with all complex processes, there are several potential pitfalls. Accordingly, many business owners use commercial lawyers to assist their companies. This article will explore the three main reasons for using a commercial contract lawyer to draft, negotiate and finalise your business contracts.
Importance of Contract Wording
Before exploring the benefits of legal assistance with your written agreements, it is helpful to examine why the content of a commercial contract is important in the first place.
Put briefly, a commercial contract sets the rules of engagement between the parties, including what your company can and cannot do. Additionally, it establishes the deal’s financial value to each party. It is essential to ensure that any commercial contract is accurate and fair. Failure to do so may give the other party opportunities to avoid payment or contract performance.
The worst-case scenarios regarding commercial contracts may include:
- wording that allows the other party to exit the contract at short notice without paying adequate compensation;
- weak payment clauses that enable the other company to withhold or avoid payment;
- wording that fails to prohibit the other organisation from misusing your intellectual property or confidential information; and
- biased language favouring the other party’s interests, such as a penalty clause if you terminate the agreement that does not also apply to the other party.
Now we can appreciate the importance of contract wording. Let us delve into three common reasons organisations in England use commercial lawyers.
1. Drafting and Creating Contractual Documents
Drafting a contract can be a daunting process. This is particularly so when the subject matter is highly complex. Additionally, you must consider the other party is likely to engage their own lawyer. Thus, in the event of unsuitable wording, their lawyer may rewrite the written agreement to drastically change it.
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2. Negotiating Commercial Contracts
Drafting a commercial contract is only one of many steps. The art of negotiation is a valuable one and is second nature to expert commercial contract lawyers. A lawyer’s value tends to come to the fore during negotiations over contractual wording. Not only can a lawyer identify ways in which the terms of a draft contract are unreasonable and unbalanced. They can also help negotiate sensible adjustments using neutral wording. The best negotiators use well-reasoned and neutral wording to discuss potential amendments. This is likely to ensure your commercial interests are prioritised while maintaining a positive relationship with the other party.
3. Reviewing Contracts Before Signature
You must review any contract before signing it. A commercial lawyer can perform a final check of the wording and interpret any so-called legalise for you. They will be able to inform you whether the language is balanced between parties and whether the advantages outweigh any concessions your company makes.
Ultimately, a contract review will put you in a position where you can balance any financial or legal risks to your organisation against potential profit and advantage. This way, you can sign a written agreement with confidence that you enter into a legally-binding arrangement, fully aware of all it entails.
Key Takeaways
While engaging a commercial contract lawyer is not mandatory, many business owners find them invaluable in ensuring strong drafting and negotiation of commercial agreements. An expert lawyer can give you peace of mind regarding legal matters and reduce the risk of unfortunate consequences in the future.
If you need help drafting or negotiating your commercial contracts, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
Frequently Asked Questions
Some people give this the tongue-in-cheek nickname of ‘legalise’. In reality, inconsistencies or vague language can lead to loopholes, creating unexpected future complications. In this way, a lawyer will always recommend two sentences rather than one if it makes the legal document more airtight.
Not if they work for an external legal practice. The usual signatory needs to hold an appropriate position with your company which discounts any external lawyer.
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