What, do not you trust me? ...

10 reasons why you must make contracts and what should be included in them

The truth is I'm a little tired! Fed up. Every week a number of new customers come to me, small and medium-sized companies with a dispute with customers, suppliers and third parties, asking me to file a lawsuit on their behalf on behalf of the court and possibly an injunction and all kinds of legal proceedings. And then comes the stage where I want to see the contract they made with that baneful side. At that moment there is silence. The CEO looks at the vice president, the deputy director looks at the secretary and she immediately jumps up and asks: "Would you like some coffee?"

I will talk to you today about the reasons why you must, but really must, make written contracts. In this short article I will explain the advantages of using the contract as well as the right way to do it on this occasion I will also briefly explain why a drafted contract, as a rule, is better rather than a verbal agreement and a handshake ...

Well, most people think of a contract as a written document, while an agreement between people will be considered an oral statement. By law, there is no difference! The word "contract" is the alternative to the term "consent / agreement".

True, an oral contract is enforceable in court just like a written agreement. The big problem is to prove the agreements between you. If your agreement is oral, you need at least one witness, preferably more than one, who can confirm the version of the events or the details of the terms agreed upon. On the other hand, a piece of paper, or today, a computer file, well-signed and documented, cannot be easily denied!

I'm sure some of you are still irritated by the habit and money involved when your lawyer insists on documenting everything and writing registered letters, but think and compare your response when you have a customer or a provider who uses the phone alone without any document or documentation, no matter how honest he is And straight.

I have often heard the argument that a verbal contract is as good as one written. While this is true, but how do you intend to prove that you have a contract at all, if that is your word against his word?

In addition, it is important to understand the indirect costs that may be incurred when there is no contract. For example, an office client who developed a product but did not sign a production contract with his manufacturer - which would cost a few thousand. In the absence of a contract, a few years later the manufacturer started producing the same product for my client's competitor. The cost of the legal proceedings in the Tel Aviv District Court, which included motions for injunctions and other important petitions, an unnecessary mediation process imposed on us by the court, as well as numerous but necessary interim proceedings, reached NIS 92,000 at the end of the day!

But are very small and simple examples, but the risk of their realization exists in every element of our lives when we depend on another person. The bottom line is that first, through a written agreement, you can prevent a pre-fall into such traps. And secondly, the written contract will give you a legal course of action to compensate you for your wasted time and for any other damage that may be caused to you.

Moreover, the biggest problem when you work without contracts is, the so-called legal jargon, implicit or implicit contract. In other words, when a dispute breaks out between you and a client / supplier / investor / business partner / employee, and so on, as to why you meant this or that or how one agreement or another was to be made, Importing the conflict will force you to make decisions about what the parties intended only by looking at your behavior and what you were told in the various media (email, fax, etc.). This means that the honor of the court can decide that you have waived certain rights in the work that you have done, giving up that you never intended to give up, and thus you will get a much worse deal than a transaction involving an experienced lawyer who would advise you to write your consent while paying attention to legislation And the relevant ruling.

10 examples of the advantages that will arise from professional legal advice and drafting and signing contracts:

1. A contract will help stay on the right side of the law

Many people, including owners and managers of companies, find the law and ruling complex and confusing. As a result, I often encounter businesses that fall into disputes with the law because they do not understand or recognize the relevant law and case law. Of course, there are DIY contract templates available on the Internet, but the source of these templates is unclear and known, and may endanger your business and not offer you full protection and in those cases you will not have anyone to seek compensation for damages while layers insure themselves against damage that may be caused to you by mistake or professional negligence.

2. A contract allows you to prove the details of agreements and obligations of the parties

This is certainly one of the reasons why a written contract is essential for your business - since a signed and signed contract serves as an official record of what the parties involved have agreed upon and constitutes a legal-visual source to prove the details and terms of what you and the other side have agreed to and will allow you to take legal action to enforce these agreements.

For example, a contract will provide you with: instructions on the management and signing powers given to the owners or managers of the business, the ultimate understanding of the agreements between the owners of the company and its investors, the end date of each contract with a service provider, when to pay for completed work, Either towards your employees or simply who can cancel or terminate a contract under what conditions.

But remember! All of these things must be written in the contract to constitute legal proof.

3. A contract helps you avoid misunderstandings with the other side, minimize the risk of conflicts and limit your liability

A written contract is usually produced during a sensitive business venture between the parties entering into a business agreement. The main purpose of this written agreement is to give you and the other side an opportunity to read and understand more clearly the terms or conditions and rights and obligations of the parties, including the personal expectations of each party and what they agreed upon after a thorough discussion and negotiation. Each side has to take the deal seriously, and its very existence encourages the parties to cooperate and carry out their obligations, reducing your risk of liability to the other side.

4. A contract helps you get paid

In your list of business priorities, making a payment will probably be at the top. So if your customers do not pay, you lose. A contract can communicate to your customers when they can expect you to invoice and when they have to pay their bills. If they decide not to cooperate, the contract is legally enforceable and will support and assist you in any legal action you take to repay the debt.

5. A well drafted contract provides you with confidence, certainty and peace of mind

In any commercial transaction, a written contract can provide security, certainty and peace of mind to all parties involved in the transaction.

Yes, we said that things can be agreed by word or by email, but how much legal-visual status they have, the answer is very little, and they are very difficult to prove. Good contract will describe the operational and familiar processes of the transaction and explain how customers can use the services or products By giving this information, you create certainty that all parties know how to act and what is expected of them, this certainty will give you the peace of mind to concentrate on what you really are good at - producing, selling or servicing.

For example, a written contract of employment establishes the conditions between the employer and the employee in relation to their role and responsibilities, payment of wages and general relations. The employer is legally responsible for the payment of the employee's wages and other benefits imposed on him by law, while the worker is expected to diligently perform his duties as described in the job description. A well drafted contract gives good protection to both parties involved when the agreed terms are not made or violated.

6. A contract helps prevent breach of confidentiality, theft of trade secrets from you and unfair competition towards you

One of the ultimate benefits of making written contracts in business transactions is the opportunity to agree to confidentiality and non-disclosure clauses and protect your sensitive / confidential information. As part of the agreement, the parties concerned shall, legally, keep confidential the transactions involved and the information they share, and the party violating this confidentiality agreement shall be liable to compensation under the Agreement.

Equally important, the written contract may also help you prevent unfair competition from former senior employees or third parties that expose them to your secret materials, and may try to bypass you and do things on your own. However, this advantage can only be achieved through the assistance of an experienced attorney who is able to formulate the section in a manner that does not violate the Restrictive Trade Practices Law, which is a law with extremely heavy criminal sanctions.

7. A contract saves you from costly litigation proceedings

When a party to the agreement violates the contract, the written agreement will serve as an evidentiary reference to what the parties have agreed upon and will help determine who is actually the violator. Having a written contract dramatically reduces your risk of costly, long and frustrating legal proceedings, or at least curtailed the duration of your expensive litigation.

8. The contract resolves questions regarding exclusivity and licenses issues (Licensing)

Many companies ask me to obtain exclusivity for them in the sale or purchase of goods. In this context, exclusivity means consent between two or more parties to purchase products exclusively from the seller, and licensing refers to a license granted by a holder of an intellectual or physical asset to another person for the use or production of the property's property, usually for a limited / limited period.

The main ingredient in exclusive agreements is the understanding that the seller is the exclusive supplier of such goods to the buyer. This agreement usually occurs in vertical relationships between businesses such as supplier and customer, where the buyer agrees to purchase only from the seller.

But, be careful!! Oral agreements between parties regarding such exclusivity may result in you calling for a criminal investigation into the Antitrust Authority (now called the Competition Authority) on charges of creating a restrictive arrangement, an offense punishable by prolonged imprisonment. An experienced person who will draft an agreement or clause that complies with the requirements of the law and will prevent you from this risk, which, even if it does not result in a conviction, may cause you great distress and a considerable amount of money.

9. A contract regulates for you questions of jurisdiction of courts in Israel and abroad

In fact, today almost all companies in the economy deal in one form or another of international trade, be it the purchase and sale of goods or the execution of projects and the provision of services. In such a state of affairs, the parties to the transaction are usually in different countries or geographic regions where different legal systems operate. As a result, the conflict between you and the other side of the world, one of you, might in certain circumstances be forced to file your claim in the state of the other party or perhaps in a third country in general - so how would you know where to file your claim?

A written contract determines which court in the world will be authorized to discuss your claim in accordance with the parties' agreements and thus your uncertainty element as to where your claim will turn out to be dramatically reduced.

10. A good drafted contract helps you to provide good customer service and be perceived as a serious business

If your clients have a problem or a question about their rights and obligations within your contract, they can refer to the written contract at any given moment and this will give them all the information they need to try to solve it. The clauses of the contract will provide an immediate response to such matters as: returns, credits, repair policy, liability, intellectual property, complaints procedure - all the things a customer should know! By providing this information, in a document well worded by an experienced attorney, clients will feel that they are getting good service from a serious provider.

First, it must reflect what you have for sale or that you want to buy or carry out and how you think the contract will be executed by you and the other side.

In addition, both parties to the deal must understand what they agreed upon. This is a point that many lawyers miss. Long sentences, punctuation, lists of different versions of the same word, archaic word phrases, and so on; all these serve no purpose other than to impress you because the lawyer knows more than you do. But he did not! So, let's use simple language, in short sentences.

1. Complete scope of the work to be performed, including all deliverables.

2. General timeline or if possible, precise target dates for each milestone. Note, nothing you have discussed with the other party can be left outside the contract, if you want it to be enforceable.

3. Amounts and terms of payment. How many days will a person have, after the delivery, to make the payment, and how it will be paid?

4. Circumstances in which the contract can be terminated / canceled and how it will be implemented. And even if mediation or arbitration are necessary, the contract should also describe how they will be carried out.

5. Confidentiality and / or non-competition. We talked about the great importance of keeping your intellectual property secrets. If necessary, one or both parties may choose to include such a clause in the contract.

6. All the clauses relating to the handling of undertakings that have not been met. If, for example, the payment is not transferred by the agreed date, the contract should describe what the delay law (immediate termination of the contract, notice and time to fix, payment of compensation for delay etc.).

And very important,

7. Agreed damages. - that is, the parties can formulate in the contract a clause in which they agree on the amount of compensation paid by one party to another in case of breach of contract and all without having to run to court and file a claim and wait for the judgment.

Drafting a simple but professional agreement makes you look professional. It shows that you know what you are doing.

Finally, use a legal agreement drafted by an experienced and professional attorney who knows your business well will definitely protect your business. Remember, contrary to what some might think the contract does not undermine trust, it creates trust!

Think of it as "preventive medicine," and then make contracts and save money and unnecessary aggravation!