The 5 Top Mistakes When Drafting And Negotiating Contracts

1. Potential Business Partners

Commercial litigation is usually the result of five common mistakes in negotiating, and drafting contracts. The first is an inadequate knowledge of future business partners. Potential business partners must be investigated to determine their desirability. This includes a credit search, and a litigation search. Any legal disputes, or litigation in the past is an excellent representation of the partners nature, and suitability. 

2. Due Diligence

Once a partner appears reputable, and reliable, due diligence should be the next step. Taking a calculated risk is unacceptable, and a risk benefit analysis is necessary. If this is not possible, provisions for warranties, compensation, and contractual assumptions should be included. 

3. The Contract

All contracts should be reviewed, and approved by a Palm Springs business transaction law firm. This investment identifies risks, and determines the necessity of any future legal involvement. Contracts must be appropriate, reviewed, evaluated, and in accordance with any new laws or they may not be enforceable. 

4. The Terms and Provisions

All contracts must have terms, and unambiguous provisions that are well defined. When individuals are trying to avoid the obligations of a contract, they will use contractual ambiguities. Although this risk cannot be eliminated, a careful drafting can prevent loopholes, and increase the chances the contract can be fulfilled.

5. The Choice of Law Provision

State laws should be identified before a contract is construed. If litigation occurs, and no choice of law provision exists, this may result in an expensive, and frustrating fact analysis. Contracts can be confusing, and consulting a law firm first makes the process easier, and helps prevent future litigation.