Business and Law

I had originally planned this article as a sort of tongue-in-cheek look at ways that small businesses could ensure that they would find themselves on the wrong end of a business lawsuit. In other words, I was hoping to illustrate some useful points about avoiding business lawsuits by stating the exact opposite of what you should do as a smart business owner. However, the more that I thought about it, the more I came to believe that this topic is too important for levity.

As business owners, you have every incentive to avoid suing others, or suits filed by others against you. You are in business to make money, not to pay lawyers to argue with each other in courtrooms. As I often tell my clients, it is almost always cheaper and easier to prevent a problem than it is to solve one, especially when the solution requires expensive and time-consuming litigation. In that spirit, this is the first in a series of articles intended to help you avoid litigation by committing your business agreements to writing, and the expenses that accompany that process.

The first tip will seem self-evident, but you would be surprised how often it is overlooked. Whenever possible, you should always reduce business agreements to writing. Unfortunately, the days of the “handshake” agreement are long gone, and you need to make sure that you are taking all reasonable steps to document your business agreements. A well-drafted contract should spell out the parties’ obligations under their agreement so that misunderstandings and disagreements, and the business lawsuits they generate, can be avoided.

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