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5 Contract Myths

Whether in the realm of business or as an individual, the significance of a contract permeates virtually every aspect of daily life. 

Navigating the business landscape or managing personal affairs, contracts play an essential role in our day-to-day existence. Their impact extends across various facets of work and life, yet misconceptions abound, particularly among business proprietors. 

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

Contrary to the belief that securing a customer’s signature automatically confers legal binding status to a contract, the reality is complex. Legally binding status necessitates a fair consideration of contract terms and notices. Unfair terms may face challenges, potentially leading to legal action from entities such as Trading Standards or the Competition and Markets Authority (CMA). 

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

Another misconception revolves around the idea that contracts or terms can impose penalties on customers for breaches. While contracts should protect businesses, penalties, such as cancellation fees, must align proportionately with actual losses incurred. Similar caution should apply to penalties related to unauthorised information disclosure. 

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

An additional fallacy involves the belief that contract clauses can absolve parties from liability for specific actions. It’s crucial to recognise that no contract can override a customer’s statutory rights. 

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

Dispelling the myth that professional and legally binding contracts necessitate copious legal jargon, the truth lies in clarity. Contracts, regardless of their nature, must be comprehensible for the involved parties. Concealing critical terms in convoluted language or “small print” risks rendering the contract unenforceable due to its potential unfairness. 

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

While the notion of suing a client for contract breaches isn’t entirely mythical, it’s essential to acknowledge the complexity of enforcement. Drafting specific terms in contracts to make the opposing party liable for legal costs in the event of a successful case is advisable. Otherwise, the expenses associated with enforcing the contract might outweigh the benefits. 

How can we help? 

Addressing questions about proportionality, fairness, and statutory aspects, Kidwells Solicitors can provide assistance. With expertise in both law and business, we can support you in drafting documents that are not only legally sound but also strategically effective.

Our services cover a range of areas, including:

  • General Business Contracts (such as partnership agreements, indemnity agreements, nondisclosure agreements, or leases)
  • Sales Contracts (covering purchases and sales)
  • Employment and Contractor Agreements (ensuring effective, fair, and engaging 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 how we can help you. Call us at 01432 278 179 or email for a free, confidential chat.   

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