The Biz Growth Blog

Why Should You Outsource Your Contracting Needs?

Mar 17, 2022 | Uncategorized


Contracts are an essential element of running any business. They are integral to building relationships and finalising business transactions. Each element of your business should have a contract underpinning it, for example, your employees, customers, suppliers, and your business partners.

Contracts are the foundation of the two most important aspects of your business, revenue, and relationships. Not only that, but they also create legally binding obligations on your business which is why it is always best to have a written contract which has been prepared by a specialist lawyer. The days of the ‘back of the napkin contracts’ are well and truly over if you want to protect your business and avoid expensive legal mistakes.

Why Should You Outsource Your Contracting Needs?So why outsource to a lawyer? Easy, time and money. Any litigator will tell you that unravelling a poorly drafted or non-existent contract can be far more expensive than paying a lawyer to prepare one in the first place. Further, processing contracts efficiently, with the right terms helps businesses generate more revenue. An obstruction to a signed contract means an obstruction to more revenue. Equally, the quicker contracts are signed, the quicker organisations can complete deals and bring in more income.

So, if you are interested in saving time and money, here are 3 key reasons why you need a lawyer to prepare or review your contract:

1.Negotiations are Fundamental to a Smooth Relationship

At their very core, contracts are relationships and a foundation of trust. Firstly, two parties, who are often strangers, agree to work together and create a business relationship that can last for years. A contract is the visual representation of that relationship.

Contracts often go through a negotiation that ensures both sides are getting the best deal possible. The purpose of a good negotiation is to flush out any issues at the outset so to avoid conflict down the line. A mutually successful outcome sets the tone for a strong partnership. Outsourcing your contract to a lawyer ensures a comprehensive negotiation is carried out.

However, the negotiation process should not simply be looked at through rose coloured glasses. Negotiations can be hard fought, and an inexperienced negotiator can easily leave money on the table or risk kiboshing the deal. Just as you use a real estate agent to negotiate the price when buying a house, a lawyer can offer a level of impartiality, market knowledge and experience that you may not be able to deliver on your own. When outsourcing the contract, a lawyer will take over the responsibility of negotiating, drafting, and executing the contract, providing you separation from any conflict if it arises.

Ensuring that all parties know and understand the terms of the contract, is akin to players knowing the rules of the game. It is a strategy that helps prevent expensive litigation and mitigates both party’s risk. Simply signing a contract that is presented to you because you want to quickly close the deal can be very detrimental in the long run. As contract lawyers are well versed in the negotiation process, you often get a quicker and better result which helps protect your bottom line.

2. Lawyers Can Help You Get a Better Deal

Using an independent and expert third party will get you a better result. Similarly, to the real estate agent analogy above, you engage an accountant to do your tax return. An expert tax advisor should help you claim more expenses and minimise your tax exposure. An expert commercial lawyer will equally be able to advise you on the key commercial terms and any other opportunities that the business relationship may present.

Engaging a lawyer that is familiar with the specific type of contract and the industry in which you operate, means they will know the customary legal and commercial terms for the deal, which could save you thousands of dollars or a lot of heartache. For example, you may have agreed to supply goods in a timely manner. A good lawyer should specify the exact amount of business days you have to deliver the goods, as you may consider timely to mean 30 days, whereas the other party may think it means 7 days. A lawyer will be able to advise on what is reasonable in the circumstances and avoid conflict when the arrangement is operational.

Beyond just advising you on the particulars of the current deal, a good lawyer can also help you understand what the contract means for your business going forward. Some contracts contain clauses that survive beyond the initial contract period, such as confidentiality obligations, restraint of trade clauses and IP ownership. Having a lawyer that can better analyse how the contract will impact your future business can have a direct impact on your P&L.

3. Your Contract Is Enforceable

Contracts need to contain essential elements to be enforceable at law. The ‘back of a napkin’ contract hastily agreed over a business lunch will almost always fail to contain one or more of these essential elements. A key purpose of a contract is so you can enforce the terms in court if the other party is in breach. So don’t risk your contract being considered unenforceable in the eyes of the law.

Lawyers are trained to write contracts that contain all essential elements as well as clearly set out what each party is required to do and foresee any problems that might arise. A well-written contract won’t just list the terms of the deal, it will also describe what will happen if one party doesn’t hold up their end of the deal as well as limiting your liability in the event you are sued. If you end up in litigation, a robust contract can significantly limit the length and complexity and improve your chance of success.

You can also expect that a contract lawyer will be aware of implied terms as well as any laws or regulations that apply to your agreement. For example, there are a raft of implied consumer guarantees and unfair terms under the Australian Consumer Law. Failing to address these can affect the validity of your contract terms. Engaging a lawyer to draft your contract means you can be confident that your contract will comply with all relevant legislation as well as the latest decisions from the courts about a particular area of law.

Outsource Your Legal Document Creation

In summary, engaging a lawyer to prepare and negotiate your contracts is a smart business strategy. It allows you to better understand the complexities of the arrangement as well as affording you the time to focus on running your business. Your time is better spent finding the deals, not nutting out the legalities. Outsourcing your legal document creation will not only create efficiencies in your contract management process, but it will also ensure you have a more robust contract which avoids costly mistakes.

For a detailed look into the benefits of outsourcing, please click here to review the 5 Benefits of Outsourcing and action your outsourcing journey today by downloading this FREE Resource: 5 Steps to Increasing Profit by Outsourcing.

Law by Design LogoIf you need any assistance understanding and negotiation your contract, LxD is here to help. Feel free to reach out to heidi@lawbydesign.com.au for a chat today.

Alternatively, if you would like to learn more about the power of outsourcing more generally and how to get started make sure you book in a free consultation with Angie Martin’s team from The Growth Manager.

Disclaimer: This article was written by our Guest Blogger Heidi Warren from Law by Design. As The Growth Manager is not a legal representative or have authority in this manner, please direct all legal questions to the author: heidi@lawbydesign.com.au


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