The Role of a Business Attorney in Drafting and Negotiating Contracts

Contracts protect your company and shape how your business relationships work. Clear terms can prevent confusion and reduce the risk of contract disputes. Working with a business law attorney to draft and negotiate contracts can help you catch potential problems before they happen and ensure the documents reflect how you do business.

Identifying Any Potential Legal Risks or Liabilities

The purpose of a contract is to ensure that both parties have a clear understanding of their rights and responsibilities and can have the terms legally enforced if necessary. But this takes dedicated planning and extensive review in the drafting and negotiation phases, and that’s where an attorney comes in. 

A business attorney knows what to look for in contracts to protect your interests. They will identify any clauses unfairly shifting liability to your business and review any breach and termination clauses to ensure you understand how they could affect you. Suppose a contract with a client has a clause that allows them to cancel orders in progress without notice or payment. An attorney can flag this and potentially negotiate a language change requiring a notice period and a kill fee for cancelled orders.

Customizing Business Contracts to Your Needs

Many businesses, especially those that are on the smaller side, get into the habit of using generic contract templates for everything from vendor agreements to NDAs for employees. But this can leave your business vulnerable with vague phrasing and irrelevant clauses. An attorney ensures your business is as protected as possible by customizing business contracts to your needs. This means tailoring contract language to reflect your operational procedures and goals and ensuring that the roles and responsibilities for all parties are outlined clearly. 

This can also include modifying boilerplate language and making it more specific to your business’s needs. For example, a payment clause may state that a 10 percent late fee will be charged monthly for any late invoices. However, this doesn’t specify if the late fee will be charged daily or if it will be for each whole month that the invoice is late. While it may seem like a minor change, specific language can make it easier to enforce the contract if there’s an issue in the future. 

Looking for Hidden Clauses or Vague Language

Signing a contract without a thorough review from an attorney can open your business up to future liabilities and issues, even if you read through the contract yourself. Business attorneys are adept at spotting buried clauses or those written in purposefully vague or confusing language. For example, terms regarding auto-renewals or exclusivity may be hidden in other sections commonly labelled generic headers like “Miscellaneous.” 

Vague language can also cause confusion and make it more difficult to enforce the contract if there are breach of contract allegations or another dispute. For example, a contract with a vendor may have language that says that the vendor will “provide operations support” or deliver goods in a “timely manner.” These are vague terms that are open to interpretation. An attorney can clarify and suggest corrections that specifically outline the services provided or the delivery timeline. 

Negotiating Contract Terms

Contract negotiations are a normal and expected part of the process. While a contract may seem fine upon the initial review, a business attorney has the knowledge and experience to suggest modifications that can provide more protection for your business and improve the terms. Suppose you receive a contract from a client that has a net-60 payment schedule. This isn’t an issue for your business, but an attorney negotiates this to net-30 instead, significantly improving your cash flow.

In some situations, contract negotiations can be sensitive, and a business attorney can use their legal knowledge and industry insight to help you navigate these talks while preserving the business relationship. They can ensure that any requests for changes are framed in business terms to keep the process collaborative rather than adversarial and act as an intermediary between the two parties. 

An attorney can also help you decide what terms are most important to your company’s operations and fit within an acceptable level of risk. This can improve overall strategy when determining which points are deal-breakers and which can be more flexible. 

Updating Existing Contracts

Contracts need to be updated regularly as your business evolves. This includes modifying old contract templates with new language that reflects changing business operations before they are sent to new clients. For example, a service agreement you used years ago may now need to be updated to include more locations or expanded services. A contract may also include auto-renewal clauses or old pricing structures that are no longer part of your operations. An attorney can help you make those changes to ensure that everything is up to date and reflective of your current needs. 

It is also essential to update contracts regularly to ensure that they are legally enforceable. An old contract that refers to a previous business structure or point of contact may not always be enforceable after these things change. If you’re not sure if your existing contracts need to be updated, an attorney can review your documents and help make that determination. 

If you need help drafting, negotiating, or modifying business contracts, contact the attorneys at Kendal Law Group PC. We can help you ensure that your contracts provide adequate protection for your business and align with Michigan law. Call 248-609-1718 to schedule an appointment with a member of our team.