Running a small business means signing contracts. Whether you're hiring a contractor, entering into a partnership, leasing commercial space, purchasing services, or working with a vendor, contracts are part of everyday business. But when is it worth having a business contract lawyer review an agreement before you sign it? For many business owners, the instinct is to read through the contract, make sure the basic terms look right, and sign. That may be fine for a straightforward agreement you've used many times, but other contracts can contain obligations that aren't obvious at first glance.
A clause buried in the middle of a lengthy agreement could affect your ability to terminate the relationship, your financial obligations, or what happens if something goes wrong. Having an attorney review an important contract before you sign can help you understand what you're actually agreeing to and identify potential problems while you still have an opportunity to negotiate.
Do Small Businesses Really Need a Contract Lawyer?
A business contract lawyer isn't necessarily needed for every document a small business signs. However, legal review can be particularly valuable when a contract involves significant money, a long-term commitment, intellectual property, confidential information, or substantial risk to the business. The cost of reviewing a contract before signing it may be relatively small compared with the potential cost of dealing with a dispute later.
An attorney can help identify provisions that deserve additional attention and explain how the agreement could affect your business. This can be especially helpful when you're presented with a contract written by the other party, because the agreement may naturally be structured to protect that party's interests.
What Types of Business Contracts Should an Attorney Review?
Not every contract presents the same level of risk. Some agreements are relatively straightforward, while others can create significant legal or financial obligations. A business owner may want legal guidance before signing:
- Commercial Leases
- Partnership Agreements
- Buy-Sell Agreements
- Employment Agreements
- Vendor Contracts
- Service Agreements
- Independent Contractor Agreements
- Purchase Agreements
- Licensing Agreements
- Noncompete Or Confidentiality Agreements
The appropriate level of review depends on the agreement and the circumstances surrounding it. A contract that seems routine may still contain provisions that could create problems for your particular business, so it's worth considering the potential consequences before signing.
What Should a Business Contract Lawyer Look For?
One of the biggest benefits of having an attorney review a contract is getting another set of eyes on the details. A business contract lawyer may look at issues such as payment terms, deadlines, termination rights, liability, warranties, dispute resolution, and what happens if either party fails to meet its obligations.
For example, a contract might say that a business can terminate the agreement, but another provision could require significant notice before termination. Those provisions need to work together. An attorney can also identify terms that may be unusually favorable to the other party or provisions that could create unnecessary risk for your business.
What Happens If You Sign a Contract Without Reading It Carefully?
Signing a contract generally means agreeing to its terms, even if you didn't fully understand every provision. That's why discovering an unfavorable clause after the agreement has already been signed can put a business owner in a much more difficult position than addressing the issue beforehand.
Business owners are busy, and lengthy agreements can be difficult to evaluate while also running a company. That's one reason legal review can be valuable before an agreement is finalized rather than after a dispute develops. If a provision needs to be changed, it's generally much easier to discuss it while both parties are still trying to reach an agreement.
Can a Business Negotiate a Contract?
Yes. A contract isn't necessarily a take-it-or-leave-it document. Many business agreements can be negotiated before they're signed, particularly when the terms involve significant financial commitments or long-term obligations. Depending on the situation, negotiations might involve:
- Payment Terms
- Contract Length
- Termination Rights
- Renewal Provisions
- Responsibilities Of Each Party
- Liability
- Insurance Requirements
- Dispute Resolution
- Confidentiality
- Intellectual Property Rights
A business contract lawyer can help identify provisions worth negotiating and explain why certain language may be important. The goal isn't necessarily to change every provision in an agreement, but to make sure the business owner understands the obligations and isn't accepting unnecessary risks.
What Is a Contract Termination Clause?
Termination provisions explain how and when the parties can end an agreement, making them an important part of any business contract review. A contract might allow termination for a specific reason, require written notice, or automatically renew unless one party provides notice within a certain period.
Missing a notice deadline could potentially result in the agreement continuing longer than the business owner intended. Understanding the termination provisions before signing can help prevent unpleasant surprises later, particularly with contracts that automatically renew.
What About Automatic Contract Renewals?
Automatic renewal clauses can be easy to overlook. A contract may initially be for one year but automatically renew for another year unless someone provides notice within a specific window. If the business owner doesn't know about the renewal requirement, they could unintentionally become committed to another term.
This is particularly important for vendor agreements, service contracts, leases, and other recurring business relationships. When reviewing these contracts, make sure you understand not only when the agreement begins and ends, but also what you have to do if you don't want it to continue.
Should You Use a Contract Template You Found Online?
Templates can be useful starting points, but they aren't necessarily appropriate for every business or transaction. A template created for another state, another industry, or another type of business may not address the specific circumstances of your agreement.
Even a contract that appears simple can have important details that depend on North Carolina law or the particular relationship between the parties. A template should not automatically be treated as a substitute for legal advice, especially when the agreement involves significant money, property, ownership interests, or long-term obligations.
When Should a New Business Talk to an Attorney?
Ideally, legal planning begins before the business starts signing significant agreements. A new business may need assistance with formation documents, ownership arrangements, contracts, leases, and other agreements. Getting the legal structure right at the beginning can be easier than trying to correct problems after the business has already been operating.
That doesn't mean a business needs an attorney sitting beside the owner for every transaction. Instead, it means knowing when a particular decision carries enough legal significance to justify professional advice. Establishing a relationship with an attorney early can also make it easier to get advice quickly when an important contract or business issue comes up.
What If You're Already in a Contract Dispute?
The best time to review a contract is generally before signing it, but if a disagreement has already developed, don't assume there's nothing an attorney can do. An attorney can review the agreement, examine the circumstances surrounding the dispute, and help the business understand its rights and obligations.
The contract itself is only part of the picture. Communications between the parties, performance under the agreement, and other circumstances may also matter. If you're already concerned that a contract may be headed toward a dispute, getting advice early may give you more options than waiting until the disagreement escalates.
How Can a Business Contract Lawyer Help?
Eldreth Law Firm provides business law services for companies in Raleigh and throughout North Carolina, including assistance with contracts and agreements.
A business contract lawyer can help a business owner understand an agreement before signing, identify provisions that may need to be negotiated, and provide guidance when a contract dispute arises. The goal isn't to make every business transaction more complicated. It's to make sure the business owner understands what they're agreeing to and has an opportunity to address significant concerns before they become problems.
Learn more about Eldreth Law Firm's Business Law services.
A contract doesn't have to be complicated to deserve careful consideration. If an agreement could significantly affect your company's money, operations, ownership, or future, taking the time to understand what you're signing can be a worthwhile investment. For small business owners, the goal isn't to have an attorney review every piece of paper that crosses your desk. It's knowing which agreements deserve a closer look before you put your signature on them.
