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Slinde Nelson

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Slinde Nelson

Avoiding third-party contract mistakes

On Behalf of | Jan 19, 2023 | Contracts

As a business owner, protecting your company’s interests and minimizing risk whenever possible is essential. One way to do this is to consider your contracts with third parties and vendors carefully.

Familiarize yourself with common contract mistakes to avoid trouble when working with a third party.

1. Not clearly defining the scope of work

Clearly defining the scope of the work includes outlining the specific tasks or services needed and any expected future deliverables or milestones. Keeping the third party accountable for their performance can prove difficult without a clear scope of work.

2. Failing to include termination clauses

Even if you have a positive relationship with the third party, include termination clauses in your contracts. This allows you to terminate the contract if the third party fails to meet its obligations or the relationship becomes untenable.

3. Neglecting to protect your intellectual property

If you plan to share proprietary information or intellectual property with a third party, include provisions in your contract to protect it. This may include confidentiality clauses or licensing agreements. Failing to protect your intellectual property can put your business at risk.

4. Not reviewing the contract thoroughly

Before signing any contract, it is important to review it thoroughly and understand the terms and conditions. Do not hesitate to ask questions or seek advice if you do not understand any provisions. Neglecting to review the contract carefully can lead to misunderstandings or disputes down the line.

5. Not updating the contract as needed

As your business evolves or grows, periodically review and update your contracts with third parties. This ensures that the agreement continues to meet the needs of your business and that all parties are clear on their obligations.

Avoiding these common mistakes can protect your business and establish strong, successful relationships with third parties.