Business owners should know about the legal pitfalls of operating a business. Here are some to consider.
No written contracts. When you do business without contracts, you do so at your own risk. What’s the use of making an agreement if it’s not enforceable? Sure, it may be convenient to just rely on verbal promises. But what if something goes wrong? Good contracts serve important functions like the following:
- define the parties’ obligations and legally bind them to those obligations
- limit a party’s liability or shift the risk of loss if something goes wrong
- require parties to handle a related dispute outside of court, which is especially beneficial when the dispute requires attention from someone with particular expertise or if the parties wish to maintain confidentiality
- supersede other agreements, understandings, or promises that are not included in the contract
- provide a remedy if a party breaches the contract