Klein & Wilson

5 business to business contract mistakes to avoid

When parties enter into a contractual agreement, they expect all parties to make good on their commitment to honor the contract. But often contracts are hastily written and do not properly address future concerns. Addressing these issues during the drafting and negotiating process will help avoid costly litigation and increase the chance of a favorable verdict or settlement if you must go to court.

Due diligence

Neglecting to investigate and better understand your prospective business partner can be a costly mistake. A calculated business risk does not mean you can fail to do your due diligence no matter how much pressure you feel to complete the transaction. Take the time and effort to research the financial credibility of your proposed partner and look for any warning sign. A complete review of the other party may not be feasible, but the contract should include provisions to handle inaccurate representations or contractual assumptions.

Powerless promises

Business transactions boil down to finances. In order to protect your money you want to make sure your contract is legally enforceable. A promise is a noble concept, but promises are easily broken. A verbal agreement is a poor substitute for a written contract signed by all parties.

A thorough contract does not take away from the underlying goal of the business transaction; rather, a contract allows the business to move forward seamlessly. Writing a comprehensive contract prepares the business to succeed even in the event of uncertainties. Also, make sure to have the contract notarized to prevent disputes.

Consider breaches

After you have decided to enter into a business relationship with another party you need to consider what would make you want to end the relationship. Worst-case scenarios are rarely self-fulfilling prophesies because taking the time to identify possible problems and solutions helps avoid the issues altogether. The problems are dealt with in advance rather than reacted to after-the-fact.

Termination opportunities

Failing to consider clear termination opportunities for all parties could leave you trapped in a contract. All parties should have the opportunity to end the business relationship even if a contractual breach has not occurred. A party does not need to commit a misdeed in order for you to want to move on. Sometimes the relationship is just not working out as expected and you want to end it.

Dispute resolution strategies

Not including dispute resolution strategies could leave you stuck in litigation. Litigation costs for civil disputes decided by a judge are expensive and time consuming. If you do not want to spend money on litigation costs, consider mediation or arbitration first. Additionally, your resolution strategies should address where the resolution will take place if you are working with out of state or international business partners.

Relying solely on cooperative spirit to achieve common goals is a surefire way to leave your business unprotected. Spending money on a well written contract before entering a business transaction just might save you money in the long run.

No Comments

Leave a comment
Comment Information
  1. RATED BY | Super Lawyers | Top 100 | Southern California | SuperLawyers.com
  2. Avvo Rating | 10.0 | SUperb | Top Attorney Litigation
  3. PREEMINENT AV | Martindale-Hubbell | PeerReviewRated
  4. RATED BY | Super Lawyers | Top 50 | Orange County | SuperLawyers.com
  5. Best Lawyers | BEST LAW FIRMS | U.S.NEWS | 2018
  6. KLEIN & WILSON | RECOGNIZED BY | Best Lawyers | 2019
  9. AVVO Client's Choice | Award 2017
  10. OCTLA | Orange County | Trial Lawyers Association | Trial Lawyer Of The Year
  11. The National Trial Lawyers | Top 40 Under 40

Contact Our Attorneys Today

Please call the law office at 949-478-0521 or fill out the form below to arrange a consultation with a lawyer.

Bold labels are required.

Contact Information

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.


Privacy Policy

Get Started

Klein & Wilson
4770 Von Karman Avenue
Newport Beach, CA 92660

Phone: 949-478-0521
Fax: 949-631-3703
Newport Beach Law Office Map

Firm Office