How can I ensure my contracts are enforceable?

How can I ensure my contracts are enforceable?  The failure by one party to a contract to meet their obligations under that contract is one of the most common causes of legal disputes.

As a result, here at Axia Litigation Lawyers, we are often asked by our clients what they can do to ensure their contracts are enforceable and as binding as possible.

It might be too late once a dispute arises, but the best piece of advice you’ll ever get in successfully enforcing a contract is to make sure at the outset that you have a contract or agreement with the right terms and conditions.

Whether it’s a consignment note, a simple supply contract or a multi-million dollar vendor finance contract, getting the right advice in preparing the document can really reduce the chance of a dispute later on and also the cost of successfully enforcing your rights.

If you supply goods on credit for example, you need to ensure your interest in that property is well secured with the right clauses in your documents.  Ensuring registration, when appropriate, on the Personal Property Security Register (PPSR) is also critical.

You probably hear this one from your accountant often enough, but keeping good records, even during periods when a contract or agreement is running smoothly, is very important.  It’s often hard to tell if or when an agreement is about to turn sour, so it’s a good idea to document everything, just in case.  Good records will help your lawyer to enforce the contract, demonstrates to the court that you are acting in good faith and may even assist in locating a debtor if they try to abscond to escape their liabilities.

How can I ensure my contracts are enforceable?

Another critical piece of advice is to be very cautious about contracting only with companies.  Both well intentioned businesses, and those less trustworthy, may attempt to place any liability solely on a company which can simply fold with no assets for you to pursue when times get tough.  Whenever possible you should try to get personal guarantees from the individuals behind the companies.  If you’ve ever borrowed money for your business you’ll know that banks expect personal guarantees.  If it’s good enough for the banks, it’s good enough for your business.

Take action as soon as possible.  If you’re serious about recovering your money or property or enforcing your rights under an agreement you need to act quickly.  Debtors may abscond, assets may be moved or “lost” or other creditors may get in first.  These are just a few of the reasons you need to seek advice as soon as possible if an issue with a contract occurs.