Many business lawyers spend a good portion of their careers looking over contracts for their clients. You might be wondering exactly when you need to have one do the same for you. Not every agreement demands extensive legal review, but here are four that do.
Getting It Wrong Is Expensive
Some contracts are tiny, but others can be massive to the point they might endanger your enterprise. Even if everything in the contract feels like boilerplate that you can easily sign, it's wise to have an attorney parse the agreement.
This is primarily a risk-mitigation strategy. Even if you feel 99.99% sure the contract is enforceable and will never create any problems, it's worth paying some fees to account for the 0.01% that you can never be too sure about.
Potential Legal Exposure
While we tend to think of business contracts as pertaining mostly to money, there are legal risks too. For example, how much liability might you take on in an agreement?
You should also be thinking about tail risks when it comes to the legal side of the equation. An agreement might be profitable and incur little to no legal exposure now, but it could create problems down the road. You might find, for example, that the terms of an agreement create a scenario where you can't sell the company because no potential buyer would be willing to take on the contract.
The Company's Public Image
Although not a strictly legal problem, many businesses have public relations concerns tied to their contracts. Even if there are none you can foresee, you could be surprised by them down the road as the economic, political, and social environment changes.
It's important that the contract can be terminated under such circumstances. All parties should be able to exercise rights to terminate contracts, potentially with some penalties or fees being paid for exercising them. Truthfully, this applies even in situations where there will never be any PR exposure. It's just a generally good idea.
Protection of Intellectual Property
IP is increasingly an important asset in a business. If you're entering into a relationship with a company where some of your IP is transferred, there needs to be clear boundaries on its use. They should not be able to license or transfer the IP, for example, without first seeking your consent. Similarly, there should be sunset provisions that encourage the renewal of the terms every so many years.
If you need help with a business contract, contact a business lawyer like Harris Shelton Hanover Walsh PLLC.