Four Steps to Managing your Legal Contracts

There are some basic skills that every business owner needs in order to succeed in business. One of the most primary skills is the ability to know when you need to have a lawyer review a contract before you sign it. In a perfect world, you would have a lawyer review every significant or complex contract, but the world is not perfect, and only the largest companies can afford to have in-house legal counsel on staff for such tasks.

So what do you do?
First, you need to have a relationship with a skilled business lawyer who has taken the time to understand your business, your skill level in these matters, and your budget.

If a lawyer receives a call from a new potential client asking to have a contract reviewed quickly, it is very difficult for the lawyer to do that quickly, or for a fee that is fair to the lawyer and the client. The lawyer has to go through some formality of opening a file, explain the costs, ask many questions about the business and the goals of the client, and then review the contract and provide advice. All of this takes time and thus adds to the expense of the task.
On the other hand, if you have already developed a relationship with the lawyer to the point where your lawyer already understands you and your business, the matter might be handled by a quick telephone call or email delivering the contract to the lawyer and an email response. In many cases this can be completed very quickly, and for a very efficient cost.

Step One – find a good business lawyer who is prepared to invest in understanding you and your business, develop an ongoing relationship with him or her, and stick with that lawyer as your trusted legal advisor.

Second, you need to develop some basic proficiency in reading contracts. You must develop the ability to know when the contract needs to be reviewed by a lawyer.

This type of proficiency only comes with practice. While you are new to contract review, or if you are reviewing a new type of contract for the first time, take the time to review it with your lawyer so you can ask questions to help you understand the terms. Invest the time to learn what the contract’s provisions mean so that next time, you do not have to take the contract to your lawyer.

Step Two – take the time to have your lawyer help you understand the contracts you will be signing.

Third, make a habit of confirming oral contracts or oral amendments to a contract.
Many business agreements do not get reduced to writing that is formally signed. Even if the original contract is in writing, amendments or clarifications are often agreed to by verbal agreement.
Most contracts are equally binding if made orally or by written signed agreement. The problem with oral contracts is that they can be difficult to prove. If you are the one trying to prove the existence of ahe contract to enforce a claim in a court of law, the onus will be on you to convince the court on a balance of probabilities that there was a meeting of the minds between you and the other party sufficient to form a contract and what the agreed terms were.

Step Three – make it a habit to send a confirming email to the other party confirming what was agreed to.

A quick email such as the following would work:

Further to our telephone conversation, thanks for agreeing to amend our contract for the sale of widgets so that the unit price going forward will be $10.00.
Your help on this is much appreciated.
Yours truly,

Finally, your contracts, and written and verbal amendments, are only helpful if you can find signed copies.

Step Four – make sure you have a system to save your contracts and confirming email.
In this digital age, consider investing in a document management system. If the contract is important enough, email a signed copy to your lawyer for his file. He will have a system for saving and retrieving your important documents.
For all of these reasons, a strong relationship with a skilled business lawyer can open the door for you to move forward in the wonders of the business world. The lawyers at Holmberg Watson Business & Estate Lawyers can help.

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