The biggest mistake that business owners make with respect to their contract is failing to sign in the proper way. If you have a business contract and you just sign your name then you didn’t obligate your business, you obligated yourself. You went to all of this trouble to set up a business, use it!
So if you sign a contract that’s supposed to be a contract for your business sign it with the name of the business, your name and your title so XYZ Corporation, John Walker, President. That obligates the business not me personally.
The second biggest mistake is failing to spell out clearly what it is that people are supposed to do in this agreement. Spell out who is going to do what, by when, under what conditions, over what period of time and how much it’s all going to cost.
The third mistake that business owners make with respect with their contracts is failing to respect the boiler plate at the end of the agreement. The boiler plate is that legalese, that gobbledygook that’s at the end of the contract that makes the thing too long that pretty much everybody hates including layers but it’s extremely necessary and it’s extremely important to making sure that the agreement that you think you have actually is enforceable.
The boiler plate will say such things like, if we get into a dispute we’re going to settle it in Houston with Texas law, not New York, with (Delaware) law. It says that if you’re obligated to pay me and I choose to cut you some slack because you’re late that just because I did that one time doesn’t mean you always get to pay late.
It also says that our entire agreement between us is what’s contained in the contract not what we said some place else or we said verbally, what we wrote down someplace else, just what’s in the contract.
And it also says that if part of the contract is invalid the whole thing is not invalid. That’s boiler plate and it’s critical to making sure that you actually have an enforceable agreement not just a bunch of words on paper.