INTRODUCTION

Agreements govern our daily lives. Whether as individuals or when running businesses, we have housing loan agreements, car hire-purchase agreements, sale and purchase of goods or services agreements and others. Whether we are always conscious of it or not, our daily dealings have contractual and legal implications.

A legally binding agreement must have offer and acceptance and supported by consideration. It can be written or oral. However, an agreement which is not in writing or evidenced in writing may be difficult to prove. If it is not properly drafted, it may give rise to disputes.

REASONS FOR LEGALLY DRAFTED AGREEMENTS

1.         To manage expectations

An agreement specifies the rights and obligations of the parties and hence, manages their expectations.

Parties know from the outset what is expected of them. For example, a good legal agreement identifies not only the goods and/or services to be provided, but also how much, how, when and where it will be provided. It also deals with related issues such as warranties, delivery, maintenance, breaches and termination.

The terms of the agreement should be as specific as possible. For example, in an agreement for the sale of goods or services, you need to specify the price, how and when payment is to be made, and the consequences of non-payment.

An agreement should also identify what you expect from the other party. Terms addressing co-operation, quality of goods or services, inspection of premises and/or documents, and ownership of intellectual property rights are usually included in a sale and purchase, licensing or distributor agreement.

2.         To protect your business

A business is not only about making profits but also about protecting what you already have.

A legally drafted agreement is like insurance or savings. You make provisions now for contingencies that may arise.

When things are going well, you may not think of the usefulness of a legally drafted agreement. But when a dispute arises, your protection may well hinge upon one or more of the terms and conditions you have included in your written agreement.

A legally drafted agreement can clarify any misunderstandings or disagreements which may arise due to faulty memory or where your business partner may have more in mind that what you believed you have agreed on.

3.         To suit the particular transaction

Agreements that were taken from old files, copied from previous transactions, or downloaded from online resources are not recommended when compared to a legally drafted agreement.

In order for an agreement to be an effective business tool, it must be tailored to meet the needs of the parties and to reflect specifically the transaction required.

What may be right for one business or situation may be totally irrelevant for another. Much depends on the wishes of the parties, the type of business involved, the nature of the transaction, and the goods or services being offered.

4.         To promote business/customer relationships

When you present a legally drafted agreement to your business partners, it will leave a good impression on them. They realise that they are dealing with someone who is conscientious and professional, and they will likely believe that the goods and services that you supply would be of reputable quality.

5.         To comply with the laws

Laws change from time to time. There may also be certain laws which are applicable in one country but which may not be applicable in another.

Hence, if you download an agreement from online resources or if you cut and paste from various sample agreements, there may be terms in the agreement which may not comply with the laws of the country.

6.         A good business investment

A legally drafted agreement will free you to focus on your business goals and objectives, promote business and customer relationships, and protect your business from potential losses.

A large number of commercial disputes which land up in court involve arguments over poorly drafted agreements or where the terms in the agreements are insufficient to cover the particular scenario. Nothing is more certain than properly and legally drafted agreements.

Whether your business partner is a childhood or best friend, it is really not a matter of trust. In business, better be sure.

7.         Use of Standard Trading Terms and Conditions

If you are involved in the selling of products or services, a legally drafted standard terms and conditions of agreement will be very useful. These standard terms and conditions may be printed on the reverse side of your quotations and will cover your rights as to payment, interests for late payment, breach of agreement, termination rights for non-payment, rights to stop further deliveries, retention of title until full payment, exclusion of oral representations and warranties, limitation of certain liabilities, and indemnities.

CONCLUSION

The above reasons are some reasons why it is very advisable to have your agreements legally drafted.

A well-drafted legal agreement will help you maintain good business relationships, save you from potentially huge losses and unnecessary litigation.