Precision of language is important; effective communication between your employees and different divisions of your company can give you a competitive edge and protect your market share. Similarly, effective contracts can protect your assets and give you the upper hand during disputes. Simply put, bad contracts can be one of the biggest threats to your business, and what you don’t know can hurt you.
What’s the difference between a cat and a comma?
Like your business, legally binding contracts are built from the ground up; you can’t have an effective agreement without a solid foundation. In the same way that construction wouldn’t start without a blueprint, contracts can’t effectively describe an agreement until common terms are established and agreed upon. Only then can obligations, assurances and provisions be defined.
While the individual words are important, most disputes will consider other factors like intent and course of conduct. Additionally, certain types of clauses may be worded differently from contract to contract, but establish the same types of protections. Understanding these nuances is key to a well-defined legal plan, but can be tedious and time-consuming.
One has claws at the end of its paws; the other is a pause at the end of a clause.
Overlooked clauses can open your business up to damaging practices and force expenditures outside of your budget. Entrepreneur explains the effect a Cumulative Rights clause could have on your business: “Without this provision the contract could be interpreted to mean that the exercise of one remedy in a contract prevents the exercise of other remedies. For example, a court might find that terminating the contract prevents your company from suing to recover past due payments. This provision creates a contractual right to exercise any and all remedies in the contract.”
You know your business, and you know the problems that can affect you and your bottom line. Because of that knowledge, your business has the flexibility to make course corrections to avoid pitfalls and turn challenges into assets. Your business is your expertise; at Gertsburg Licata, our expertise is the law and how it affects your business.
Alex Gertsburg is a managing partner at Gertsburg Licata. He may be reached at (216) 573-6000 or at [email protected].
Gertsburg Licata is a full-service, strategic growth advisory firm focusing on business transactions and litigation, M&A and executive talent solutions for start-up and middle-market enterprises. It is also the home of CoverMySix®, a unique, anti-litigation audit developed specifically for growing and middle-market companies.
This article is for informational purposes only. It is merely intended to provide a very general overview of a certain area of the law. Nothing in this article is intended to create an attorney-client relationship or provide legal advice. You should not rely on anything in this article without first consulting with an attorney licensed to practice in your jurisdiction. If you have specific questions about your matter, please contact an attorney licensed to practice in your jurisdiction.
