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Thousands of everyday Australians run large and small businesses, and while the cost of running a business is a huge investment, one thing that shouldn’t be dismissed is the need for quality legal and business advisory services.

As a commercial lawyer I see business people trying to save money by drafting their own agreements, contracts, or terms and conditions of engagement. The agreements are usually cut and paste jobs from other agreements or obtained from websites selling “off-the shelf” precedents.

Many of these agreements can have serious legal flaws with the worst kind being employment agreements that could result in potentially expensive ramifications if made incorrectly.

Before engaging in any commercial transactions or signing any agreements, it’s important to seek legal advice or have those agreements properly drafted by experts.

For many people, it would appear on the surface that the drafting of legal documents is a simple exercise and should not be expensive. However, despite many beliefs, there is no such thing as a simple agreement. Even the terms and conditions of engagement for day to day trade work can lead to a variety of unforeseen outcomes.

Even the most simple sentence in an agreement is underpinned by an understanding of theoretical legal concepts; the relevant statutes, rules regulations and day to day experience of a legal practitioner and how they relate to the operation of your business. The drafting of a simple sentence in an agreement or lease can leave even the most seasoned commercial lawyer with a negligence claim, such is the volatility law.

Legal costs

Speak to your lawyer about how much their services will cost, which can vary depending on the amount of legal work required for your business.

You may save money by avoiding a lawyer, but in my experience, if your agreement has been incorrectly drafted you may wish you had invested your time in a legal expert from the outset. Here are some common mistakes I’ve witnessed.

  1. A poorly drafted agreement resulted in it being declared void for uncertainty, ambiguity or at law;
  2. Incorrect party. The business owner did not appreciate subtle differences between legal entities and their client has just gotten away with big bucks because they liquidated the company and began trading under another entity;
  3. Failure to undertake necessary checks after drafting an agreement, such as obtaining relevant consent or permits or meeting statutory requirements under the relevant legislation;
  4. The failure to include mandated legislative requirements which could result in a claim for underpayments, particularly in the case of employment agreements.

Litigation confusion

Agreements drafted without the assistance of lawyers may become problematic if any legal dispute or litigation proceedings arise down the track. Courts can be left wondering whose version of the intention of the agreement is to be believed and why the parties then embarked on conduct not even remotely related to the agreement. To complicate matters further, they entered into handshake agreements whilst everyone was on good terms.

Despite being a business cost, it’s wise to invest in trusted legal counsel before embarking on complicated agreements, contracts or terms of engagements. The resources you saved by not engaging a lawyer may end up costing you more if something goes wrong.

If your business is in dispute, visit our range of Dispute Resolution services.

The contents of this blog post are considered accurate as at the date of publication. However the applicable laws may be subject to change, thereby affecting the accuracy of the article. The information contained in this blog post is of a general nature only and is not specific to anyone’s personal circumstances. Please seek legal advice before acting on any of the information contained in this post.

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