Many of us can recall the old TV commercial featuring a mechanic performing major engine repairs to a car, who chastised that the costly damage could have been prevented by the regular purchase of a low priced oil filter. “You can pay me now,” he warned, “or pay me later.”
Lawyering and auto repair may not share much in common, but in this there is some similarity. The fact is, many of our most involved commercial litigation cases could have been avoided with some “preventive maintenance” up front. And it pains us to see clients embroiled in costly and time-consuming trials which could have been averted for the price of some advance review and drafting of documentation.
All too often, commercial litigation is caused by one side or the other misunderstanding the ramifications of a transaction, and failing to plan ahead through thorough contract negotiations. For example, we have seen a developer go through several days of arbitration seeking rulings on the interpretation of a contract drawn on a form not intended for the type of arrangement the developer had intended with his general contractor. We have seen clients effectively deprived of remedies because pursuit of breaching parties would have imposed untenable travel burdens or litigation expenses. And repeatedly, we see creditors cringe over their inability to recover interest or attorney’s fees from defaulting debtors.
All of these situations can be prevented through sound contract drafting. At MeyerGoergen, we are equipped to help you through any necessary litigation. But it is also our job, as we see it, to help you avoid any unnecessary litigation. Generally, this can be accomplished in two ways:
- If you are dealing in a series of similar transactions, such as the establishment of customer credit accounts, we can help you to develop contract forms tailored for your use on a day-to-day basis.
- For separable transactions, we can provide rapid turnaround on review of proposed contract documents, and we can assist you with spotting potential problem areas or negotiating more favorable terms. Such service becomes more essential as the importance of a particular deal increases.
Among the questions you need to ask yourself before entering into any business contract are:
- If a dispute arises, am I more likely to be the party suing or being sued? Your answer will influence your choices from various options for contract clauses setting the location of any courts which might resolve the dispute, waiving or retaining the right to a jury trial, forcing arbitration, or imposing an obligation to reimburse legal expenses.
- If I have to sue, what remedies will I need? Contracts can help pave the way for special remedies like injunctions, rights of set-off, seizure of collateral, or rights against third parties.
- If I get sued, what is my exposure? In Virginia, clauses limiting the damages a non-breaching party may recover are generally enforceable. Provisions for liquidated damages, on the other hand, are closely scrutinized and almost always require a lawyer’s helping hand at the drafting stage to survive a later court challenge.
In general, many people make the mistake of assuming that the “standard boilerplate” is not really important to a deal. To the contrary, you should expect contract clauses to be enforced in virtually all cases, whether those clauses were negotiated or merely preprinted. The time to act to protect yourself from unfair terms or sharp dealing is before you sign on the dotted line.
Attorneys:
Bernie Meyer
Scott Simmons
The materials on this website are meant for informational purposes only and nothing contained in this site is to be construed as legal advice. If you need legal advice, you should contact an attorney directly. Do not act upon the information on this site without seeking professional guidance. Information on this website about specific matters or success in previous cases is not meant to be a prediction or guarantee of similar results in any other case. Each case consists of factors and applicable law unique to that case and you should consult an attorney.
