When asked at business conferences and speaking engagements and in meetings as general counsel I am often asked about the most important things a business owner should pay attention to. One of the greatest and most consistent sources of business mistakes, pitfalls that seriously disrupt or cause the demise of a business are quite simple: business contracts. Properly constructed business contracts prevent unnecessary disputes in San Diego and protect valuable business relationships. Why do so many small to mid-sized businesses in San Diego underestimate the importance of getting this aspect of their business right? The real answer is usually cost. The business owner perceives the cost to have an attorney create a contract far exceeds the value, and they believe they can do it themselves through a download form site or by copying another contract off of the web.
Let’s take a closer look at these perceptions. The first is cost. The cost of a contract is directly related to the size of the transaction it governs, and the amount of risk assumed by the parties. If you are going to use a contract over and over (such as a sales or service agreement or employment contract) and you download or modify an online contract, every time you “reuse” the contract (modify it to fit the unique circumstances of the transaction) your “costs” and associated “risks” are going up. Experienced business owners know that business disputes aren’t a question of “if” they are a question of “when.” The cost of resolving the business dispute is directly related to the amount of ambiguity in the contract you’ve created, and the amount of clauses related to California law you’ve inadvertently left out.
This is the great trap. When a business owner attempts to create their own contracts, they may save a few hundred dollars at that moment. However, the first time they become involved in a dispute with a customer, vendor or employee the initial cost of managing the dispute or resulting lawsuit will be measured in thousands or tens of thousands of dollars. Perhaps even more important than the actual dispute associated with a single transaction is the potential damage done to the business relationship governed by the contract. You may have a valued customer or vendor that is important to your business and its profitability. Poor contracts lead to disputes that result in protracted litigation and the destruction of valued relationships.
If you are serious about your business, one of the first details you should attend to is your business contracts. Your customers, vendors and employees will respect the quality and thoroughness of your agreements as well as the professional image they convey about you and your company. Our well crafted business contracts prevent unnecessary disputes in San Diego. They guide the parties step-by-step through their transaction or relationship. Saving a few dollars to craft your own contracts is one of the most common and expensive mistakes business owners make. The relatively small cost of a well crafted contract yields significant return on investment from any perspective. If you are interested in working with the Watkins Firm to review existing contracts or create new agreements we invite you to contact us for a free consultation at 858-535-1511.