When launching a business or while running a business, contracts often become a tick box exercise. Some entrepreneurs download a free template online, browse through the terms and hope for the best. The reality is that a poorly drafted or misunderstood contract can result in costly mistakes.
Contracts are legally binding
Every contract you sign creates legal obligations. If the terms are not certain, they can expose your business to risk. Whether it is a supplier, customer, investor, or employee, you need to understand what you are agreeing to.
Big corporates do not negotiate without legal representation
There is a reason major companies never conclude contracts without legal support, as they know what is at stake. They understand that every clause matters and the need for legal risk management in contracts. As a startup or SMME, your resources may be limited but your risk is not. If you are negotiating a contract without legal advice, you are exposing your business to risks you may not be able to identify.
Common risks in contracts include, amongst others, the following:
- Auto-renewal traps that lock you into contracts longer than expected.
- Limitation of liability clauses that shift all the risk onto you.
- Vague or unreasonable payment terms that delay your cash flow.
- No dispute resolution clauses.
- Data privacy omissions that put you at risk of data protection legislation violations.
- No IP protections.
“I can negotiate without legal representation” may cost you more than you think
Would you operate on yourself if you had a medical issue? Probably not. Then why take on legal surgery without a professional? One bad contract can cost your business its reputation, funding, or survival.
At MHM Attorneys, we help South African businesses simplify and strengthen their contracting process. From contract custom templates to review and negotiation, we align your contracts with your business goals or objectives. For contract review and negotiation, please feel free to email us on: info@mhmattorneys.co.za
