When your business relationship with another party is going well, you might not give a second thought to the contract that underpins it. In fact, many business owners do not even get around to putting a contract in place for some of their relationships. They just cannot foresee there ever being a problem between them and the other party, or at least not one that they cannot easily solve.
The problem is that even the best relationships can suddenly take a turn for the worse. If you have no contract in place, it leaves you at much higher risk.
There is a high likelihood that you will face litigation
Figures from 2022 show that 52% of small businesses in the country faced at least one lawsuit in their first five years. As a small business, dealing with a lawsuit can represent a significant hit to your resources and profits, especially if you are still relatively new. Spending a bit more time and money to ensure that your contracts are well written and detailed from the outset could prove to be a very wise investment.
A carefully constructed contract cannot eliminate the chance of litigation completely. However, having all relevant terms clearly laid out for both parties to see can definitely lower the risk. It can discourage others from bringing an unjustified lawsuit against you and give weight to your requests for a swift resolution when another party has failed to uphold their end of the agreement. Getting a contract just right can be challenging, so it is always wise to have appropriate legal guidance to draft them, check them before signing and review them when a dispute occurs.