Two parties can enter into a legal agreement for various reasons. For example, a company needs it when employing new workers. Furthermore, you will need to draft a contract when doing business with another company.
Unfortunately, disagreements can arise later on despite the contractual agreement and lead to huge financial losses. When that happens, you will need a contract litigation lawyer to help you resolve the matter in a civil court. This article looks at the reasons people breach contracts.
Misidentification of the True Parties in the Contract
This error is more common in upcoming businesses or existing businesses that want to become corporations. If the business is registered under a different name, then it may not kick off.
Another instance is when you sign the contract as an individual instead of a company. In this case, you may end up in great trouble when disputes arise in the future. Therefore, you need to understand the true parties in the agreement before signing the contract.
The Signing of Personal Guarantees
As stated earlier, your name or signature must not appear anywhere during the agreement if you wish to avoid a contract breach. Otherwise, you will end up with additional charges on top of what the company is being sued for.
Unfortunately, some people sign personal guarantee documents, thus holding them liable if the contract is breached. Do not make this mistake if you want to steer clear of the error of incorporation. It is also paramount to engage a contract litigation lawyer when signing personal guarantees.
Including a Jurisdictional Clause
This part of the contract states that if a breach arises, the contract will be ruled in favor of one party. Most times, this is done regardless of a change in states. That can be detrimental to your finances if you are on the receiving end. You would also have to hire legal counsel from the same state listed in the jurisdiction clause, which is limiting.
Including an Arbitration Clause
Another clause that often leads to contract breach is an arbitration clause. In this case, the parties agree not to take the matter into court if a dispute arises. The major reason for this move is to save money. Unfortunately, when you do this, you completely lose the chance to fight for your rights. Additionally, there will be no way to appeal or have a jury hear your case if you make such a mistake.
Breach of contract is a costly offense. It can also be devastating and financially incapacitating. Because of that, you should avoid the above mistakes. And if you fall victim, hire a contract litigation lawyer to help you out.