Protect Your Bargains

To contact us Click HERE
What to do when your partnerwon't honor a contract
Every day in the business world, companies sign contracts,honor their part of the bargain and then discover that the other side isn'tliving up to its end of deal. Most businesspeopleenter into agreements assuming that the other party has the same intention andability to honor the contract.All too often, you learn – the hard way – that integrity andperformance is a one-way street. But you can protect your bargains.
Due diligenceYou should know with whom you're doing business.Long-standing relationships can help, but they are not foolproof. One clientjust discovered that he had been doing business for a few years with someonewho was recently indicted for serious crimes. Even though our client had nothingto do with the alleged felonies, the mere association with a potential felon threatenedto taint our client's business and reputation. Further, the alleged crimes jeopardizedour client's ability to obtain financing, attract investors and operate his companyat the same level of profitability.
Of course, finding out you're in business with allegedcrooks usually happens only in Grisham novels. Still, plenty of entrepreneurslearn all too late that they are doing business with people who don't honordeals or would rather fight than deliver on a bargain. 
But conducting due diligence can weed out potentialproblems. Consider conducting background checks and obtaining financialstatements and references for the other party. Sometimes, we have checked courtrecords and found lawsuits that demonstrated the other side either can't or won'tfulfill their bargains. Likewise, if you talk with people who have dealt withcertain companies, you may discover that the other side enters into deals easilyenough, but then spends all of their time "retrading." That is, oncethey've locked you into a deal, they attempt to renegotiate the terms, instead ofliving up to the bargain.
Spell out your protectionsDraft a contract that not only captures the business terms,but also protects you if the other side does not deliver. The protections canvary. You need provisions that cover the "what ifs" and providemeaningful remedies if the other side defaults. Often, you will want toestablish whether you will go to court or engage in arbitration – each has itspros and cons.
You should also draft a clause entitling you toreimbursement of your attorneys' fees if you prevail. Contrary to popular misconception,you are not automatically entitled to payment of your legal fees if you win. Read more…
Jack Garson is the founder of Garson Claxton LLC and leads the firm’s business and real estate practice groups. Jack serves as a legal advisor for numerous local, regional and national companies, focusing on business transactions, commercial real estate, commercial leasing, and construction law. In addition to providing legal counsel, Jack serves as a strategic advisor and negotiator for many clients, providing guidance on issues such as the growth and sale of businesses, liability and risk reduction, the hiring and retention of key personnel, and protecting and enhancing profitability, as well as negotiating the resolution of complex commerce.