We work with many clients that are dealing with the consequences of not having contracts in place, and worryingly come to us when it’s too late. Getting a legally sound contract agreed at the beginning of every business transaction is critical. We spoke with Partner and Technology Specialist, Martin McKinnell, on the importance of having contracts in place to protect your business.
There are many problems caused by not having accurate terms and conditions in place:
Terms of agreement
It is not clear whether terms of the contract have been agreed and, if so, what those terms are. The exact scope of services/description of goods to be supplied/sold under the contract and the price and payment terms for them is then not certain.
The parties will be faced with potentially unlimited liability for any breaches or similar default.
The parties will not be able to terminate the contract in certain desired circumstances (such as insolvency or financial hardship of the other party).
Matters such as the ownership of the goods and intellectual property rights in the product of any services (and similar issues) will not be defined in the contract and will then revert to the standard position in law (which may be undesirable).
Issues such as confidentiality will not be dealt with on a contractual footing between the parties.
Contracts are quick and simple, but arguing your case without a contract can be difficult if something was to go wrong!