Saving your business the time and cost of litigation requires affirmative steps to avoid commercial contract disputes. In the current litigious business climate, businesses must do more than sign simple written agreements.
Anticipate and Investigate
Anticipate commercial contract disputes before they arise by investigating the companies with which you do business. Part of signing a commercial contract is due diligence, which means checking the backgrounds and reputations of the parties to all contracts before you put pen to paper. Knowing that a certain company has a reputation for defaulting on obligations could mean the difference between your business's success and a costly lawsuit. Areas you might research include a company's past financial statements, news stories about the company, recommendations and thoughts from your network, and the courts' cause lists for past lawsuits involving the company.
Identify and Fix Problems with Your Existing Contracts
Examine the contracts underlying your business relationships to determine if you need to make changes. The changes you make now could avoid serious disputes in the future. If suppliers always deliver goods behind schedule, re-negotiate your existing contracts to either lengthen the delivery timeline or enforce stricter consequences for late deliveries. That way, if the supplier is late again you will not miss an important deadline for your business.
Know Your Industry
Do commercial contracts in your business's industry always include certain language because it protects the parties? Obtain some sample contracts or speak to others in the industry about contractual pitfalls you should avoid. In the shipping industry, for example, you probably need a disclaimer of liability for natural disasters and other unavoidable “forces majeure” that would affect delivery timetables.
Work with an Attorney to Create Contracts for All Your Needs
An attorney can draft an agreement that not only meets legal requirements, but also protects you in case the business relationship sours. For example, contracts should include a dispute resolution clause specifying how the parties will resolve any dispute that should arise and which jurisdiction's laws will apply. Every contract you sign should clearly explain the relationship between the parties and what each party must do to fulfill the contract.
To find out more about Bahamian commercial law, visit Gonsalves-Sabola Chambers online or call the office at +1 242 326 6400.