CONTRACTS: SIMPLE AND OFTEN MISUNDERSTOOD BUSINESS TOOLS

Most business relationships start with a contract.  This contract can be verbal, or written; very informal or formal, but let’s not forget that at the heart they are all contracts.  Most business lawsuits also involve contracts and start over a contractual dispute.  So we cannot discount the importance of words that constitute our agreements in the business world.

An informal contract could be a handshake.  People meet in a business setting, agree to do some form of business together and a contract is formed.  A common, often repeated, idea is that verbal contracts are valid in California.  This is true, but the next question is who are you going to believe?  People change their stories and understandings on purpose (also called a lie!) or inadvertently, as their memories fade with time.  People usually remember the facts most favorable to their own position and forget the rest.

My advice based on years of experience as a business attorney:  stay away from verbal contracts, even for small matters.  In today’s world when everyone has access to e-mail and texts on their phone, just confirm the terms you agreed upon in a follow up text or e-mail and it WILL hold up in court.   However, in the case of important agreements, you should consult an attorney and give the essential terms that you agreed upon to that attorney so she (or he) can draft a proper contract.

On the other hand, a lot of business contracts may not be verbal, but badly written by “do it yourself people” who think they can download a form from the internet and fill it out, sign and avoid paying an attorney.  What people forget is that when a dispute arises, it could cost 10 to 100 times more to rectify the problems you create with a bad contract.

There are laws on the books and coming out of courts every day.  Having an attorney who can provide advice about the legal ramifications of each provision in a contract, not only can save business owners money, but also time, and the frustrations of getting involved in a lawsuit.

So, before you sign a business contract, have an attorney review it, who specializes in that particular subject matter. The NAWBO-Esquire group of attorneys who are all members of NAWBO-OC is a great resource to guide you to the right attorney.

Mahyar Ghassemian is the CEO and principal attorney at Ghassemian Law Group. If you’d like to learn more about contracts or other legal matters, reach out to Ghassemian Law Group for additional information and answers to all your questions. You’ll discover why we’re Orange County’s premier law firm focusing on Business, Construction and Personal injury law.