Small business owners affected by COVID-19 know all too well the importance of written agreements in these uncertain times. What's included and what's not a small business can make or break when the unexpected happens. To answer your legal questions and help you minimize business risk, we partnered with Staples to host a free webinar with Rocket Lawyer founder and CEO Charley Moore and On Call attorney Michael Fucci.
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What should I include in my business contracts after COVID-19?
There are several strategies you could consider to reduce the uncertainty of drawing up your own contracts after the pandemic. First, evaluate your previous contracts. Are there any clauses or regulations that have not worked as well or have exposed your business to unnecessary loss or risk?
Second, you should add a force majeure clause to your contracts going forward. A force majeure clause is a provision in your contract that protects your business from unforeseen problems, such as natural disasters, that can make it extremely difficult or even impossible to deliver on your contractual promises. The force majeure provision would allow you to withdraw from a contractual obligation in the event that an extreme and unforeseeable event prevents you from reaching the end of business. In a post-COVID world, you may want to include a force majeure clause in your future contracts, specifically addressing issues such as pandemics or shutdowns related to the pandemic.
Third, you could consider adding an arbitration clause to your future agreements. If you had a problem with a contract and the courts should be closed again, you can virtually solve this problem with an arbitrator. Otherwise, you can wait for the courts to open to resolve a dispute.
After all, it is really important to get all of your agreements in writing. Don't rely on verbal agreements and a handshake to seal a deal. If it's important to you, write it down and make sure everyone who signs the contract knows what's in it. RocketLawyer allows you to enter into many types of business contracts, including a service contract, a sales contract, a sales contract, and more.
What are some tips for successfully negotiating a business contract?
The first step is to read the contract in full. Remember that the binding agreement is not what you agreed orally, it is what you signed. Therefore, you need to know what exactly is in the written agreement. Second, you need to communicate with the other party to ensure that both requirements are being met fairly. External discussions and negotiations can be included in the agreement in writing if necessary.
Check whether the contract contains unfavorable or ambiguous terms. The best way to do this is to read through the contract as if you were unaware of the situation. This is how a court will read it when there is a dispute. It is best if the contract is as clear and specific as possible, even if you know what is meant by unclear language. If you can't reach terms that you think are fair, you may need to be prepared to walk away without a deal. Remember, no business is better than holding onto bad business.
Contracts can be difficult to decipher. The language can be very technical and it can be difficult to know which clauses need to be kept and which are optional. Ask an attorney if you have any questions about a specific contract or general questions about limiting your risk during and after the pandemic.
Is it legal to digitally sign documents?
Electronic signatures have been legally binding like physical or “wet” signatures since the law on electronic signatures was passed 20 years ago. RocketSign lets you create or upload a digital signature document and invite the other party to virtually sign it!
If your agreement requires notarization, you may want to check if your state recognizes e-notary services. About half of the states allow this. If your state doesn't, you can use a mobile notary public. A mobile notary will come to you and practice social distancing while the document is notarized. The state of Montana does not recognize notarized non-governmental agreements. You can always ask a lawyer about your certification options.
Digitally signed documents can be securely stored online, even in your own RocketLawyer account. Physical documents with a “wet” or ink signature can be kept in a safe place at your company location.
What should I do if I think my contract is failing?
Communicate early and often if you feel that you or the other party cannot meet your contractual obligations. This gives both parties enough time and time to figure out what their expectations should be and if their expectations need to be changed. If the contract simply cannot be concluded, the parties can try to reach a compromise. Of course, asking a lawyer is never a bad idea, but communication and compromise can be great first steps.
In the future, you may want to include a compensation provision in your future agreements or even a separate compensation agreement. This can protect you from some liability if the contract can no longer be executed.
If my company uses disclaimers, are they enforceable?
Some states have granted companies liability protection from COVID-19 lawsuits. If you use a disclaimer for your business, you may want to check that the terms are clear, concise, and fair. The other party must understand what it is agreeing to when signing it. A disclaimer does not necessarily protect your company from willful, reckless, or grossly negligent behavior. As a result, you may want to make sure that your company is following local guidelines.
You can also check that your company is properly insured. Are your current insurance policies adequately covered? Depending on the nature of your business, you can also consider rental guarantee, business interruption, or business tenant guidelines. These are newer products that can help with COVID-19. If you are interested in any of these newer guidelines, consult an attorney with any questions about whether the coverage will meet your needs.
This article contains general legal information and not legal advice. Rocket Lawyer is not a law firm or a substitute for a lawyer or a law firm. The law is complex and changes frequently. For legal advice, please contact a lawyer.