Business owners will be aware that entering into an agreement is an essential and inevitable part of running any business, no matter what size. Whether it is a contract of sale or an agreement to provide a service, business owners must have regard to the method in which agreements are documented, to ensure that their interests are protected and avoid potential liability and protracted litigation.
Although agreements can be entered into verbally, the best way to ensure your position is protected is to create a clear and detailed agreement in writing that addresses all of your expectations from the outset and before the business relationship commences. The reason for this is simple: written agreements provide more certainty and clarity for all parties involved. By setting out the details of what is agreed in writing, parties are reminded of their rights and obligations and are more likely to act in accordance with the agreement and manage risks effectively.
In addition, in the event of a dispute, the courts will turn to the written agreement to identify what the parties’ intentions were at the time of the agreement.
A well-written contract or agreement should do the following:-
- Identify each party;
- Outline the scope of the work to be performed by each party;
- Specifically outline what each party is required to do, or not do;
- Set out all relevant timeframes;
- Stipulate the method in which payment is to be made;
- Identify the applicable jurisdiction of the agreement (QLD, NSW etc);
- Set out the procedure in the event a dispute arises between the parties;
- Outline the circumstances in which the agreement can be terminated;
- Set out the recourse or remedy available to each party in the event of a breach by the other party; and
- Be executed by all relevant parties and bear a date.
A written agreement provides proof of what was initially agreed by the parties and will help to prevent any misunderstandings or disputes from arising during the course of the business relationship. As most business owners know, disputes between parties do arise from time to time, which is why it is crucial to have a written document that can be referred back to at any stage.
Ultimately, as a business owner, a written agreement is the best way to insure yourself against any wrongdoing or breach by the other party. If the wrongdoing or breach is serious enough, commencing litigation may be the best option available to you. In that case, a written agreement between the parties can be used as evidence of what the parties’ intentions were at the time they entered into the business relationship with one another. If litigation ensues, the contract or agreement will assist the court in clearly identifying the breach by the other party and subsequently, the type of recourse or amount of damages that should be awarded.
At the end of the day, no business owner wants to become involved in ongoing litigation in order to enforce an agreement. To avoid this, the best approach is to be proactive and diligent when commencing any business relationship and not underestimate the importance of a binding written agreement, that will hold each party to account and ensure that your interests are protected.
At Rose Litigation Lawyers, we have the benefit of working through many disputes and this informs us so as to ensure that when drafting written agreements for our clients, they are watertight and seek to minimise any commercial risk to our clients. Should you have the need for a commercial agreement to be documented, please contact our offices for an initial, obligation free discussion to see how one of our specialist commercial litigation lawyers on the Gold Coast and in Brisbane can assist.