Why Does Wording Matter in Business Contracts?

wording, Wheaton business contract lawyersMost people were taught at a reasonably young age to be sure to read anything they sign, especially documents that create a contractual relationship. If you own a business, you probably realize the importance of doing so now more than ever. The reason is simple: the wording of your contracts matters a great deal. Moreover, the way that a contract is worded is crucial to the enforceability of the agreement. One misunderstood clause or provision could cost your company thousands of dollars, and the contract might not be enforceable in the way that you understood it to be.

How Poor Wording Can Cost Your Business

Nearly all business transactions are guided by some type of contract, including those between you and your suppliers, your clients, and even your employees. The reality is that poor wording or confusing language in a contract can put your company at risk in just about every way you can imagine. You could face legal action for failing to meet your customers’ expectations. You could find yourself on the short end of deals with your suppliers. You could even be facing wrongful termination lawsuits and other litigation related to your employees.

Key Elements of Business Contracts

Each contract is going to be different, as various types of contracts are used to serve specific purposes. For this reason, you should work with a qualified business contact attorney before signing any agreement with a partner, distributor, supplier, employee, customer, or client. This can allow you to be sure that the wording of the contract does not put your company at risk and that you did not overlook any elements that should have been included in the contact. Such elements may include, but are not limited to:

  • Clear verbiage in simple language to reduce misunderstandings;
  • A section that defines the terms as they used in the agreement;
  • Warranties, limitations, and exclusions that are applicable to specific products or services;
  • Limitations on liability or liability exclusions, as appropriate;
  • Provisions on how disputes regarding the contract;
  • A provision that releases both parties from the contract if unforeseen circumstances should occur; and
  • All relevant details about the services and products, such as pricing, payments, interests, and penalties.

Contract Review Is Crucial

Whether you have drafted the contract yourself or the contract was drawn up by the other party, you should always have it reviewed by your lawyer before you sign it. Your attorney can help you identify possible areas of concern and can propose changes that might need to be made to protect your best interests.

Call a Wheaton Contract Lawyer for Help

At Stock, Carlson, Oldfield & McGrath LLC, each of our attorneys has over 40 years of legal experience, and we are equipped to help you with all of your business contract concerns. For guidance with drafting a new contract or to have a contract reviewed, contact an experienced DuPage County business lawyer at our firm. Call 630-665-2500 for a confidential consultation

 

Sources:

https://smallbusiness.chron.com/write-contract-verbiage-17516.html

http://www.forbes.com/sites/allbusiness/2013/10/03/big-legal-mistakes-made-by-start-ups/

Is Your Company’s Non-Compete Agreement Enforceable? The Answer May Surprise You

DuPage County business law attorneysBusiness owners often use non-compete agreements to protect their brand and trade secrets. Previously reserved for high-level executives, these contracts have even made their way into the “lower-income” sector. However, state law prohibits the use of non-compete agreements in some situations. Furthermore, such agreements must meet certain criteria to be considered enforceable by the courts. Where does your company stand on its use of “covenants not to compete?” The answer may surprise you. 

What is a Non-Compete Agreement? 

While non-compete agreements are not stand-alone documents, they do frequently make an appearance in other types of contracts, such as employment agreements and contracts for the sale or purchase of a business. Used to protect things like a company’s trade secrets, marketing tactics, client or customer data, and other sensitive business information, they prohibit the signer from working in a specific industry, trade, or geographical location. It may also prohibit the singer from working with specific competitors (prospective employers). 

Examining the Rules for Non-Compete Agreements

Prior to the beginning of 2017, non-compete agreements only needed to be considered “reasonable” to be enforceable. As defined by the Illinois Supreme Court, non-compete agreements are only reasonable when they: 

  • Require no restrictions greater than necessary to ensure the protection of an employer’s legitimate business interest (which can only occur if a legitimate business interest exists);
  • Do not impose undue or unnecessary hardship on the employee; and
  • Are not directly or indirectly injurious to the public.

It is important to note that the rules of enforceability may not always be applied the same in each situation. For example, a non-compete agreement may meet all of the rules and requirements, but if the employee did not acquire confidential information during their employment, the contract may be considered void and unenforceable by the courts. 

The passage of the Illinois Freedom Act, which occurred in 2016, places some additional restrictions on non-compete agreements as well. According to Illinois state law, low-income employees (defined as those who make the greater or either minimum wage or $13 an hour) cannot be asked to enter into a non-compete agreement, even if they have access to sensitive or confidential trade or industry secrets. However, this law does not apply to non-compete agreements signed before the Act’s passage. In that case, the original criteria would apply. 

Our Wheaton Business Law Attorneys Can Assist Your Company with an Enforceable Non-Compete Agreement 

To get ahead in today’s competitive market, business owners need to carefully protect their trade and industry secrets. Non-compete agreements can help, but only if they are truly enforceable. Backed by more than 40 years of experience, the DuPage County small business lawyers at Stock, Carlson, Oldfield & McGrath, LLC can review your current agreement to determine its enforceability and assist you with closing loopholes. If you have not yet drafted a non-compete agreement, we can help to ensure yours is enforceable, right from the start. Schedule a personalized, no-obligation consultation to learn more. Call 630-665-2500 today.

Source:

https://www.usatoday.com/story/money/2017/05/27/noncompete-clauses-jobs-workplace/348384001/

https://www.daily-chronicle.com/2017/10/26/state-ag-files-lawsuit-against-check-into-cash/ao65nak/

http://www.illinoiscourts.gov/opinions/supremecourt/2011/december/111871.pdf

 

Tips for Protecting Your Interests While Negotiating a Business Contract

Wheaton small business lawyersAlthough there are many key elements to running a successful business, few can outweigh the importance of successful contract negotiation. This single element can determine everything from a businesses’s profit margin for each transaction to the legal recourse that a business owner may take if a client or partner infringes on the company’s intellectual property. As such, it is critical that company owners understand the elements of effective business contract negotiation.

Examining the Five Elements of Contract Negotiation 

An effective business contract should do more than simply state the terms of an agreement; it should detail a reasonable arrangement that mutually benefits all involved parties, and it should clearly define the environment and conditions under which the parties are willing to operate. To reach such an agreement, business owners are encouraged to implement all five elements of contract negotiation, which include:

  1. Prepare for the Negotiation Process – To create a mutually beneficial contract, you must first prepare for the negotiation process. Start by determining their strengths and weaknesses and determine how they might use these in negotiations. Consider your own strengths and weaknesses as well, and determine your aims for the contract (what do you want to accomplish?). Also, know your deal-breakers and decide what you are willing to compromise on during the negotiation process;
  2. Clarify the Details – Once you have an idea of what should be in the contract (these are the terms under which you are willing to operate), it is important to ensure you closely examine all of the details. Are your conditions and expectations clear? Are the financial terms easy to understand? Is there any verbiage that may confuse your potential client? When does the contract come into effect, and when does it end? What happens if one party defaults on their part of the contract, and is that clearly stated? For best results, have your attorney examine the details and wording of the contract, as they can help you avoid potential loopholes and confusing or cloudy terms or details;
  3. Exert Pressure to Encourage Contract Signing – Parties typically only sign a contract when they feel confident that they can benefit from the contract and its terms – but a successful negotiation should take it one step further. The other party should feel as though they are losing something by not signing the contract. Know your market, your other options, and ensure you have a seasoned attorney to assist you with this element. 
  4. Offer Concessions (When and Why) – Concessions are not an automatic element in contract negotiations. Instead, they are usually added at the end, when parties feel a deal is possible and they are ready to close. Try to offer concessions that provide a great deal of benefit to your partner at a low cost to you, and determine if the concessions offered by the other party are beneficial enough to your company;
  5. Close the Deal – Once all the parties agree on the major aspects of the contract, it is important to close the deal. By not asking when you are truly interested and see a possible future for your partnership, you leave money on the table. 

Contact Our Wheaton Small Business Lawyers

At Stock, Carlson, Oldfield & McGrath, LLC, we understand the challenges that small businesses face because we are one ourselves. Backed by more than 40 years of experience, our seasoned DuPage County small business attorneys can protect your company’s interests during contract negotiations, and we can assist you in closing the deal. Call 630-665-2500 and schedule your consultation with our offices to get started today. 

Source:

https://smallbusiness.chron.com/negotiate-business-contract-61994.html