Forming and running a business in New Jersey involves many contracts. As a business owner, you are going to have to draft and review contracts for various pieces of your business.
Review and agree on terms
Every word of a business contract is meaningful. As you are negotiating your contract, make sure everyone agrees on the definition of every major term. A word that means a certain thing to you might mean something completely different to the other party.
It is important to thoroughly read and understand all contract terms before signing. You should not sign any contract with terms that you do understand or did not agree to.
Check both major and minor terms
Start by checking basic things, such as the names and dates. Remember that you should be identified by your business name, not your personal name, in the contract.
This can help you avoid personal liability if you are sued. The lawsuit will be against your business, not you.
Ask questions
Do not be afraid to ask for clarification or acknowledge that you are not sure what a term or clause means. Your business attorney can help by providing you with a clear explanation or asking the other side to explain what they mean.
Once you have your final contract drafted and you understand the terms, think about anything that you may have missed. Many contract terms involve “what if” scenarios, meaning they state what procedure will be followed if certain events occur.
Don’t forget to check the boilerplate
Most of your contracts are going to contain similar language that is included in almost every type of contract. Do not assume because this is standard language that it is not important.
Read the boilerplate carefully and make sure it is worded correctly for you and your business. A common boilerplate example is requiring parties to attend arbitration or another form of alternative dispute resolution if there is a dispute.
You might not want this language. There is no requirement that you have it if you do not feel it is best for your situation.
Entering a contract is easy but getting out of one can be extremely difficult. Make sure your contract terms are exactly what you want before you sign.