Protect Yourself with Written Contracts

Forbes is running a series of Twenty Tips for Startup Success. Part Seven is Protect Yourself With Signed Contracts.

Contracts can seem like a pain, but they are a great deal easier than expensive, drawn-out legal fights that can occur in their absence. No matter who you’re working with, how long you’ve known them, or what role they’re filling for your company, contracts are an assurance against any future issues. If anything, they can serve to ease any potential tensions that might arise, as the terms of your business relationship are clearly spelled out and agreed upon in writing. Having those agreements and contracts allows you and the people you’re working with to get down to the business of creating and innovating without any of the wrangling and in-fighting that has derailed so many other businesses.  And like our last post, getting professional help for those contracts is critical to ensure that they are binding when needed.

I wholly agree with this article but I would like to expand the principles beyond running a business.  Whether you are buying a car, having a roof installed, or contracting for work, you need a written contract.

This is true for no other reason that without a written contract, you cannot recover attorney fees and court costs if you find yourself in court for the other’s breach. If you merely have an oral agreement, a handshake, or a written contract without an attorney provision, you have to pay your fees without hope of reimbursement. This means many times that you are paying good money after bad. In Alabama, generally, attorneysfees are recoverable only . . . when provided in a contract.” Twickenham Station, Inc. v. Beddingfield, 404 So. 2d 43

I have found that an attorney-fee provision in a written contract is one of the greatest mechanisms to avoid court. I recently represented a church which had hired a roofing company to install a new roof. Unfortunately, the roof continued to leak and the contractor refused to repair. The church was required to sue in order to recover its damages. Thankfully, there was an attorney-fee-recovery provision in the written contract. Once we evidenced the negligence of the roofer, the opposing counsel quickly moved to settle because the more we litigated, the more their client’s expenses would increase.

We don’t live in the days of a handshake anymore. Get it in writing and include an attorney-fee-recovery provision.