Business is all about making deals. In today’s business world, documenting those deals in writing is not only smart but an absolute necessity to protect your interests. The law even requires certain types of contracts to be in writing and comply with special rules. Contracts for the sale of land, personal guarantees and debt assignments, marriage contracts, contracts with a term of more than one year and consumer contracts all need to comply with these special rules.When drafting, reviewing or advising on contracts, our Business & Commercial Law team brings to bear its members’ extensive knowledge and experience in a diversity of regional industries, including oil and gas, agriculture and farming, construction, commercial real estate and leasing, and banking and lending. Some of our lawyers have operated their own company prior to joining M&H and continue to have significant ties with the Mountain View County business community.
Why do I need a contract in writing - aren't verbal contracts valid?
Some verbal contracts may well be valid even if they have not been documented in writing. However, written contracts have several advantages to verbal ones. They will more clearly set out each party’s rights and obligations, accurately document their true intentions, provide a reference point to resolve issues efficiently and define the mechanics of the business deal at hand. Importantly, written contracts help avoid protracted and potentially costly disputes.
If you need another reason to get a written contract, consider this example. You enter into a handshake deal with a customer, John. John is one of your oldest clients, and you are comfortable extending him significant amounts of credit, because you know he is always good for it. One day, John passes away and his daughter, Susan, whom you have never met, steps in to administer his estate. When you send her the account for the last two months, she refuses to pay it because she knows nothing about this arrangement. You now have an uphill battle proving that you are entitled to the amount in the account. While you might trust someone stand by your agreement, do you also trust their executor, personal representative, and attorney, or the bankruptcy trustee chosen by their creditors? The person you choose to do business with might not always be there, and a written contract ensures your agreement stays the same, even if the parties change.
What should be included in a contract?
Obviously, the terms of a contract are dictated by the parties’ agreement as well as the type of deal that is being struck. Key terms to consider when drafting or reviewing a contract include:
Who are the parties to the deal?
Do the parties have legal capacity to enter into the contract?
When is the agreement effective and when (and how) is it renewed or terminated?
What is being exchanged? For how much? How is value calculated?
On what conditions, representations and warranties is the deal being struck?
When should payment be made? Should the funds be held pending closing of the deal?
Is interest calculated on late payment? If so, at what rate?
What are the consequences of a party failing to meet its responsibilities under the contract?
In what situation should a party compensate the other for losses incurred due to that party’s action or inaction?
What happens if the parties disagree about an essential part of the contract?
How should the parties communicate with each other?
What types of contracts can MHR Law draft or review?
The short answer is, “Any and every type of contract.” MHR Law routinely drafts and reviews a wide array of agreements for corporate and individual clients alike, including:
Asset or share purchases and sales
Employment contracts and confidentiality, non-disclosure, non-solicitation and non-competition agreements
Commercial and equipment leases
Oil and gas leases and rights-of-way
Crop-sharing, grazing and farming leases
Shareholder loans, promissory notes and guarantees