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5 Myths About Contracts in Business

Whether in business or for you as an individual, you can’t go far in day-to-day life without contracts. 

Contracts affect virtually every aspect of work and life. 

And yet, for something we are all familiar with, there are big misconceptions around what contracts can and can’t do. Particularly for business owners.  A contract isn’t as simple as putting something down in writing. Here are five common myths about contracts.  

“If I get my customer to sign it, then it’s legally binding.” 

Wrong. In order to be legally binding, a contract term and notice has to be considered fair. If it isn’t, it could be challenged, and go as far as Court action.  Trading Standards and the Competition and Markets Authority (CMA) are two examples of who could bring cases against any unfair contracts. 

“My contracts or terms can penalise a customer for breaking it.” 

A contract can, and should, protect you and your business. This includes protections against cancellations, especially when it isn’t your fault. However, any “penalties” to cancellation (such as a fee) must be proportionate to what your business actually losesPenalties against unauthorised disclosure of information should also be appropriate and reflect the impact or cost to the business. 

“If I say so in my contract or terms, I can’t be held liable or responsible for ______.” 

No contract or terms can override a customer’s statutory rights. Period. 

“In order for my contracts to be professional or legally binding, they need to have a lot of legal jargon.” 

Contracts of any kind must be clear. For a contract to be a binding agreement, the customer must be able to understand it. This protects customers and businesses, to prevent misunderstandings.   If you disguise any important terms using jargon or “small print”, it could possibly make the contract unfair. And unfair means it’s unenforceable.  

“If a client breaks the contract terms, I can just sue them to get my way.” 

This is not quite a myth, but it is not as simple as it sounds. The issue is that enforcing a contract might not be a viable option. It is worth drafting specific terms in the contract to make sure the other side is liable for legal costs, if you win your case against them. Otherwise, enforcing the contract could cost you more in legal fees than it’s worth.  

Your Questions About Contracts Answered 

So, what is proportionateWhat’s fair and unfair, legally speaking? What’s statutory? That’s where Kidwells Solicitors can help.  At Kidwells Solicitors we are experienced in law and in business, so we can support you in drafting documents that are both legally sound and strategically effective. We can help you with:  General Business Contracts. These general agreements cover the structure of the business and protects its stakeholders. This could be a partnership agreement, indemnity agreement, nondisclosure agreement or lease  Sales Contracts. Sales contracts cover purchases and sales and lay out the legal framework for transferring any titles when relevant. For example, a bill of sale or a purchase order.   Employment and Contractor Agreements. Make the most of those you work with and find an effective, fair, and engaging balance to make sure your business strategy is backed up with the right agreements for everyone in your team.    If you just need a contract checking over or an agreement from start to finish, contact us to find out if we can help you. Call us at 01432 278 179 or email info@kidwellssolicitors.co.uk for a free, confidential chat.    

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