In Australia, the implementation of a business relies heavily on commercial contracts. These documents develop valuable legal connections with customers, suppliers as well as other parties and guarantee that businesses avoid future disputes or litigations.
However, even insignificant mistakes during contract formation can lead to unfavourable outcomes like costly lawsuits and negatively impact professional relationships.
In this article, we will discuss some essential errors one must avoid while composing commercial agreements in Australia.
1. Failing to Define the Parties and Their Obligations Clearly
One mistake that occurs frequently in the drafting of commercial contracts is a lack of precise definition regarding parties and their obligations.
The agreement must clearly identify the parties involved, including any parent companies or affiliates, and must precisely outline the duties of each party.
When language used in contract writing leaves room for ambiguity or vagueness it can result in misunderstandings leading to disputes at a later date. Hence, it is essential to ensure specificity whenever possible.
2. Overlooking Important Legal Requirements or Formalities
For a contract to hold up in Australia, it must fulfill specific legal prerequisites. Failure to meet these requirements renders the commercial contracts invalid and unenforceable.
A key necessity is including consideration within the terms between all parties involved in which an exchange of value takes place and noted through signatures signed by everyone participating.
Having thorough comprehension on what it means to meet these formalities can prevent problems from arising later down the line and ensure successful completion of dealings made under such agreements.
3. Using Boilerplate Language or Copying from Other Commercial Contracts
The use of boilerplate language, which is pre-written contract language frequently used across commercial contracts, can be a convenient time-saver.
However, using boilerplate language or copying from other commercial contracts can lead to serious problems down the line.
Expertly customizing every contractual agreement to meet the unique requirements and circumstances of each commercial entity, as well as any applicable legal or industry-specific prerequisites, is imperative.
The creation process must incorporate a meticulous examination of all pertinent factors in order to guarantee an optimised, comprehensive understanding of the situation at hand.
4. Failing to Anticipate Future Changes or Contingencies
A contract that is skilfully crafted must be able to foresee changes or unexpected circumstances in the future.
In instances where a pact encompasses continuous responsibilities throughout a certain period, it should contain sections addressing unanticipated issues like sickness, force majeure events and legal alterations if one side defaults on their duties.
Likewise, when delivering products or services under an agreement between concerned parties, these commercial contracts ought to provide solutions for problems such as setbacks and impediments during delivery.
5. Not Seeking Legal Advice or Review
Perhaps the major mistake businesses make when drafting commercial contracts is failing to seek legal advice or review.
A contract lawyer can help determine potential legal issues, ensure that all legal requirements and formalities are met, and tailor the contract language to the specific needs of each business and transaction.
While legal advice may be an additional cost to businesses, it can save them significant amounts of time and money in the long run by avoiding costly disputes and legal issues.
Overall, drafting a commercial contract has demonstrated itself as quite an intricate task requiring precision and familiarity with the legal prerequisites specific to each industry.
It can be made certain that these commercial contracts will provide due protection for any associated interests by evading foreseeable errors in their assembly while also seeking guidance from legitimate authorities if required.
How can Prosper Law help?
If you need a commercial contract lawyer who will work with you, contact us today for a no-obligation quote.
P: 1300 003 077
Prosper Law is a commercial law firm. We provide legal advice to businesses across Australia. Would you like a fixed-fee, no-obligation quote from a commercial contract lawyer? Contact us at email@example.com or phone 1300 003 077.