What to keep in mind when creating a contract

When you are negotiating a contract, you may not foresee future disagreements or disputes regarding the terms of document. However, conflicts can and do occur on a regular basis. In order to be best prepared for this type of situation, you may want to consider some potential contract complications that may occur and incorporate that into your final contract. Not only could this save you from a possible lawsuit, but it can also save you time, money and emotional drain.

In a case where a breach of contract may occur, you may want to have a liquidated damages clause included in the contract. This clause names the specific amount of money that would be owed to you if the other party fails to uphold their end of the agreement. This information could make a lawsuit move more quickly in court and may ensure you do not lose any money from the breached transaction.

You may want to include contingencies, which use ‘if, then’ statements to tell people what will happen if a certain event occurs. Not only does this give important information, but it holds both parties accountable for the agreement.

A dispute-resolution cause may also be helpful in simplifying the legal process should a disagreement occur. The people involved in the contract may have to undergo mediation or alternative dispute resolution before either are able to file a formal lawsuit. ADR is a more affordable way to settle misunderstandings before taking the issue to court.

This information is intended to educate and should not be used as legal advice.

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