By Justin Escher Alpert, Esq.
Nobody knows your business like you. There are other players in your industry, some bigger, some smaller, but nobody does it the way that you do. You know your customers. You know your suppliers. But you may feel that there are no good form contracts out there to meet your specific needs. And generic templates? They’re only worth the paper upon which they are printed.
A custom contract designed for your business can be an investment well worth making. A good custom contract will be tailored to your business’s unique needs, whether for joint ventures, employment, services, or sales. It is easy for you to present well with a counterparty when you initiate the business relationships using your own customized contract. By leading with your own form of contract, you can ensure a consistency of terms, making fulfillment and internal compliance simpler for your business team.
Contract law is a complex field, with intricacies that differ across jurisdictions. Attorneys offer broad experience to navigate general and local challenges. They are trained to ask questions, challenge assumptions, anticipate potential legal and business issues, and develop protective provisions that mitigate risk, shielding clients from the impact of unexpected occurrences. An attorney’s ability to draft precise, enforceable language will ensure that your contracts fulfill their core purpose in protecting your business’s interests.
The time and money spent working with a skilled draftsman will pay for itself— especially when compared to the cost of litigation, where you lose control over the process. Legal battles over vague (or non-existent) terms can become protracted, sometimes stretching over years, diverting your attention from your core business operations. A well-drafted contract, by contrast, works to prevent such headaches, ultimately saving time and money.
The process begins with an open conversation about your business, all under the umbrella of attorney-client privilege. Counsel may review the contracts you have used in the past and discuss what you like and what you don’t like about those documents. They will come to understand what your needs are and explain what protections are essential in the current business environment. They will discuss, among other matters, indemnity clauses, limits on liability, dispute resolution mechanisms, and termination provisions to outline clear exit strategies. They will also focus on the long-term impact of clauses such as non-compete agreements or intellectual property rights, which may not be obvious to a layperson, helping avoid unfavorable terms that could stifle growth or increase risk. In going through the process, it may make sense to develop two mirror-image contracts (with subtle differences), one for instances in which you are the customer and the other for when you are the product or service provider.
At this point, the draftsman will enter his or her lair and piece together an agreement that should make broad common sense in most business circumstances. With a review and some tweaks, a final usable form of agreement should be in your hands for sales and/or services. Clients will appreciate the formality with which you conduct your business on clear and consistent terms. Of course, there may be times when you are conducting business with an 800-lb. gorilla of an enterprise that insists on using their form of agreement. In this respect, business attorneys do more than draft — they provide an independent perspective and act as intermediaries in identifying and creating leverage in negotiations. They advocate for their clients, using their understanding of legal precedents and industry norms. Having participated in the all-important exercise of designing your own form of agreement, it will be easier for you and your counsel to negotiate advantageous terms under your counterparty’s form of agreement.
Designing a custom contract for your business is a great way to develop a trusted relationship with an attorney, giving you access to his or her firm and network to creatively solve problems as they arise. The process itself should be enlightening and rewarding. When it’s time to craft a custom contract, don’t rely upon templates or do-it-yourself solutions. Consult a skilled business attorney. By doing so, you may avoid costly missteps, give your business a firm set of contracts to use as a foundation, and free yourself to focus on growing your business.
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Justin Escher Alpert is Senior Counsel at Brown Moskowitz & Kallen, P.C. in New Jersey and New York, with a primary focus on Middle Market Mergers & Acquisitions and a general corporate practice. He genuinely appreciates draftsmanship as an art.