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A contract is an important legal document to protect your business from risk. Often, businesses work with qualified and experienced commercial solicitors to help them prepare suitable and robust business contracts. Although it is possible for you to write your own contract without the help of a lawyer, this may give rise to various risks. This article will explore the risks of writing a contract without a lawyer.
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What Are the Benefits Of Working With A Lawyer On Your Contracts?
A contract is vital whether your business is supplying or purchasing products or services. Your business contract should set out each party’s obligations and key terms, such as:
- terms around payment;
- how to exit the project; and
- limiting liability if things do not go as planned.
Businesses often consult lawyers who understand business and legal issues and can help protect them from risk. This is because a specialist commercial lawyer will take the time to get to know your business and its risk exposure. The lawyer will then prepare a robust contract to help your business in various scenarios.
A lawyer can also help break down and explain complex legal concepts, ensuring you understand your contractual obligations and what can happen if you breach them. A lawyer can also advise you on best practices for contracts and contract risk management, for example, by using their legal expertise to guide you on specific clauses that may worry your customers or hinder potential deals.
Finally, a lawyer can help you when it comes to negotiating and enforcing your contracts. This is often where lawyers can add significant value. A lawyer can help guide you through the contract negotiations process, advise on which negotiations you could accept and help you address any complex legal arguments that arise. If the situation arises, a lawyer can help advice you on enforcing your legal rights if the other party to your contract breaches it.
What Are The Risks Of Writing A Contract Without A Lawyer?
Sometimes, a business may write a contract on its own and not seek advice from a lawyer. For example, a business may lack the time budget to invest in a professionally drafted contract. However, this approach can come with the following risks:
1. Not Fit For Purpose
Your contract must be suitable for your business activities. For example, a software-as-a-service supplier will need concrete licence terms for its users, covering a range of intellectual property licence issues. If you use the incorrect type of contract, your document will lack the critical protections you need.
You may not be able to foresee the various legal risks that could arise. For example, circumstances outside your control could arise and hinder the performance of your obligations. As such, your contract may omit specific provisions that are vital to protect your business from risk in the future.
Working with an experienced lawyer can help you contemplate potential risks so you can future-proof your contracts to protect yourself from potential issues later down the line. For example, a lawyer usually includes a clause relieving you of liability if unexpected outside events occur.
2. Lack of Clarity and Legal Risk
Contracts and their terms must be unambiguous. If not, this could lead to mismatched expectations between the parties and even disputes. Additionally, you may face difficulties enforcing terms that are unclear.
Additionally, there are specific terms that are high-risk and could have an impact on your contract and its enforceability. For example, penalty clauses and liability terms which are deemed unfair. If challenged in the courts, those terms may be struck out of your contract, leaving you without protection.
Without legal knowledge of such problematic terms, you may innocently include them in your contract. In contrast, working with a lawyer can help ensure that your contracts do not include terms that could be scrutinised and challenged.
3. Legal Compliance
A key benefit to working with a lawyer is their thorough understanding of the legal rules that apply to businesses. You need to be mindful of legal rules which could impact your contracts. For example, specific rules apply when:
- supplying goods or services to consumer customers; and
- processing personal information on behalf of customers as a data processor.
If your business engages in such activities, your contract may need to include specific mandatory legal terms, and you will need to follow strict legal rules.
If your agreement fails to do so, you could breach specific laws. This could result in multiple risks, including customer complaints and regulatory enforcement action against your business. If your consumer terms are deemed unfair, for example, they could even be held to be enforceable. By working with a lawyer, you can ensure that your business contract complies with any applicable laws.Continue reading this article below the form
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While writing your own contract is an option, you should approach this exercise carefully. There are many pitfalls that businesses commonly face when writing their own contracts without legal support. For example, writing a contract yourself could mean it:
- is not fit for purpose;
- misses critical terms you need for your protection; and
- fails to comply with mandatory legal rules.
As such, businesses commonly seek legal support from experienced commercial lawyers. Working with an experienced lawyer can help you avoid these risks and feel comfortable that your contracts are robust and legally sound. A lawyer can also help ensure you understand your contractual obligations, to help make sure you comply with your contractual terms.
If your business needs help with writing a contract or a contract review, 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.
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