Some say that contracts are the backbone of business. If that is true, then isn’t it important that your ‘backbone’ is straight and working like a well-oiled machine? A contract is a legal agreement between two or more parties. To be effective, it must at least contain an offer and acceptance as well as an exchange of something of value. A contract may fail because it lacks a basic element that renders it invalid or there may be subtle things that make it an unenforceable contract. Signing contracts that can’t be backed up can be a serious problem for a business owner.

What’s wrong with unenforceable contracts?

You may have spent days, weeks, and maybe even months negotiating the contract. If it’s unenforceable, you lose all that time and effort. In addition, you lose whatever you were supposed to receive.

For example, Dan B. negotiated a lucrative deal with a large international corporation. His company stood to profit greatly. However, the corporation backed out after several months. Dan learned that the contract he had drafted had omitted some important provisions and he would be unable to force the corporation to honor their deal. Not only had he wasted his time negotiating and preparing the contract, he had already invested in new equipment and hired several employees.

Contracts may be invalid for a number of reasons, including:

  • Errors or vague language;
  • Undue influence, when at least one party did not sign the contract voluntarily;
  • Lack of capacity or inability to understand the provisions of the contract;
  • Misrepresentation, fraud, or nondisclosure.

It’s not uncommon for a business or business owner to sign contracts. Using well-written, enforceable contracts may be crucial to the success of your business.

How can you avoid unenforceable contracts?

Talk to an experienced business law attorney. While it is tempting to just pull up an old contract or download one from the Internet, you will be taking a big risk. The laws may have changed since the last time you used a contract. Perhaps the contract you pulled from the Internet simply does not fit your situation.

Contract law is complicated. Bad contracts can be costly to your bank account and your business.

Learn More About Unenforceable Contracts

But maybe you are not sure how to use the exemption? Contact a local attorney who knows and understands state law.

Attorney Bruce Adams is an Alabama attorney who knows how to listen to his client’s legal concerns and provide actionable advice. Please contact Bruce at 256-237-3339 to set up an appointment. Our office is located in Anniston, Alabama, but we assist clients in surrounding communities like Gadsden, Hoover, Talladega, Vestavia Hills.