Drafting Contracts

Purveyors of goods and services would do well to undertake a review of their contract documents from time to time to ascertain if these documents serve their purposes.  Although forms proliferate and are available on the web and elsewhere, an attorney will bring a depth of knowledge and experience to the review and revision of these forms.  As such, the client should end up with as document or set of documents that will protect him in the situation where something goes wrong.  Typical areas of dispute include, the scope of the services, timing, cancellation options, and payment terms.  These must all be carefully delineated to limit the areas and possibility of dispute.

Tips for Drafting Contracts

Have your client/customer sign a written contract! (even a one-page document can insulate you from payment headaches).

Ask your client/customer to complete a credit application containing bank account information. (verify the information!)

Obtain a personal guaranty (if appropriate).

Know your client/customer!

If a corporation or other business organization, inquire as to the place of organization and then check the state secretary's records (state databases are available on-line). Is the signatory authorized to sign? Is the "company" really a company? If not, who/what are they?

Before signing a document, read it carefully! Don't be afraid to negotiate. Have your lawyer explain any provisions you don't quite understand.

Provisions to include in your form contract:

Interest:

Be clear as to when payments are due. Specify the monthly interest rate on unpaid balances.

Collection Costs:

Put your client/customer on notice that they will be responsible for collection costs including reasonable attorneys fees.

Notice of default and opportunity to cure:

Require the client/customer to give notice of any dissatisfaction and provide you with an opportunity to remedy any problem.

Mediation and Arbitration provisions:

Mediation and Arbitration, as an alternative dispute resolution techniques, has are become very popular. Many contracts contain a mandatory mediation and/or arbitration provisions. Make sure you understand these provisions. Be aware of potential pitfalls: who bears the cost; who chooses the mediator or arbitrator; what happens if there is no response to a request to mediate/arbitrate; what happens should non-binding mediation fail to resolve the controversy.

Limit liability:

Stipulate that you are not responsible for consequential damages and/or that your liability is limited to the amount received pursuant to the contract. Or, if possible, limit damages to the highest monthly billing.

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