Many business people believe in the power of word. I gave you my word, so there is nothing to worry about. Unfortunately, in reality, in some circumstances, the word cannot be kept and in other circumstances, a person who gave you his or her word, may no longer feel bound by it. That is why the lawyer’s general premise is that the words are cheap unless they are reduced to writing.
If you want to organize a corporation with another person, even your best friend, you need a shareholder agreement. If you want to ensure that a person employed by you has his/her obligations and rights clearly delineated, you need an employment contract. If you want to provide services as an independent contractor, there is an agreement for that as well.
And if you want to buy or sell a business, there are certain considerations and documents which must be reviewed and prepared to ensure the process goes smoothly. Are you buying or selling shares or assets? What are the sale conditions? Can you open another business similar to the one you are selling? What are the payment terms and how to secure the outstanding balance of the purchase price? These are just some of the questions which come up in the purchase and sale transactions that require competent legal representation.
Any transaction may carry with it tax consequences and the parties often have to consult tax professionals before committing themselves to a specific deal which can end up costing them dearly by way of tax liability.
Unfortunately, many business agreements are long and convoluted and, while you do not have to have a lawyer review them before signing, it is certainly highly desirable. Remember, whether you use legal services prior to signing such an agreement, you cannot rely on your own ignorance to avoid the provisions of the agreement you signed. After all, you are the business person, right? So, you must ensure you understand what you are signing.
If you are the one wishing an agreement to be prepared, it is very important to have a lawyer draft it because things that may seem obvious, self-explanatory, implied, or not worth mentioning to you, may turn out to be crucial and necessary to ensure that the agreement actually reflects what you wanted. Any terms which are ambiguous must be avoided since an ambiguous term may be interpreted against you.
The properly drafted contract must clearly reflect the agreement of the parties, their rights, expectations, and responsibilities, to be capable of being enforced in the event of future conflict.
Also, the agreement cannot contain terms that are illegal or unconscionable. There is no point in agreeing to something which will not be enforced by the court and hopes that it will fly. For instance, non-competition and non-solicitation provisions of business agreements often become the subject of litigation because they are unreasonable.
Remember that although no agreement guarantees headache-free transactions, it at least gives you a chance to enforce its provisions if things go wrong. On the other hand, in many cases, people who decided to save money on lawyers in the first place, end up paying much more trying to prove later that someone gave them his/her word.