5 Fatal mistakes in contracts

5 Fatal mistakes in contracts

Who does not know? You enter into a business relationship or need T&Cs for the website. You don't need a lawyer to do that much, do you?? Oh yes! That is why guest authors write Mag. Markus Cerny and Mag. Catherine Pitzal PLL.M. from the law firm Pitzal/Cerny/Partner Rechtsanwalte OG about the 5 fatal mistakes in contracts that should not happen to you in the future.

Ahead a brief definition on the term contract. A contract is voluntarily entered into between two or more parties. It is an agreement (written or oral) in which a particular matter is legally settled. In a contract, one party promises the other to do something specific, to perform a service, or not to do something and to refrain from doing it.

Is a contract valid even if it was written on a napkin in a restaurant?? Of course!

Mistake 1 – Every contract is the same

According to the general definition, a contract is clear and distinct. But if you now look at it in more detail, it quickly becomes obvious that every contract is different. It always depends on the purpose for which a contract is made. A lease, an employment contract, and a franchise agreement are all contracts. However, using an employment contract as a model for a prenuptial agreement may be a funny gag, but it should never be taken seriously. Therefore, you should always clarify at the beginning for what purpose a contract must be made. In short: different contracts for different things. Because a contract is always individual.

Mistake 2 – The Internet as your best friend

In order to save time and money, it is often Prof. Dr. Google consulted. This can have devastating consequences. Especially if a contract concluded in Austria between two Austrian companies is then based on German law. Embarrassing also, if in addition paragraphs of the German BGB (civil law book) are inside. Therefore: Be careful with sample contracts! Take this only as an incentive to think about what all you want to have in the contract. Important topics such as clauses and corrections should be worked out by a professional.

Error 3 – Too complex and at the same time vague

Contracts can – but should not – be written in a too complicated way. A good contract should be understandable to both parties. In any case, it must contain who is contracting with whom, what service is to be provided or what product is to be delivered, and what is to be done if product or service is provided or not provided. If the contract is not clearly formulated, discrepancies can arise. Especially when error 2 occurs and the Internet is taken as a translator. Here, too, it pays to contact a lawyer right from the start, so that your request is formulated in an understandable way.

The most important contract points must be contained, so that you can make contract claims. It becomes problematic if something is worded vaguely or paragraphs are contradictory. If the passages do not fit together and the next paragraph says something completely different, you have a problem saying: "I would like to claim X and Y".

Mistake 4 – Trust, but no control

Verbal contracts can also be made by telephone and are just as valid as a "face-to-face" contract conclusion. However, oral contracts are subject to proof. Very often it is said: "This was signed, but something else was discussed."Of course, what is discussed counts, but the signature ultimately weighs more. As long as people get along well, they will stick to verbal agreements. But when it comes to a dispute, suddenly it's "I never said that". Of course, a written document weighs more, because in the evidence procedure it must be clearly proven what was agreed orally. In the event of a dispute, the oral agreement must be presented and proven by the party wishing to derive rights from it. That's why the old lawyer's adage applies: Trust is good, a written contract is better.

Mistake 5 – no sanctions

In any case, you should think about what happens if the service is not provided. An example: Lt. contract product A is delivered at the agreed time. Point. What is often missing, however, is what should then take place if the product is not delivered or not delivered on time, namely the penalty.

When drafting a contract, one should start from the worst-case scenario, d.h. When a dispute arises. From this you can deduce in advance what possible dangers lurk where. Thus, sanctions can be agreed upon, which come into effect if something is not delivered (or not delivered on time) or provided.

Why it is better to go straight to a lawyer to draw up a contract?

Often, and this is understandable, people find it difficult to think about a dispute right away when they want to conclude a contract. As a lawyer, one must have a certain eye for where and why things could get dicey. For example, it is necessary to include in a contract cases and possibilities that a client does not consider or does not think of at the beginning. Even if z.B. two parties want to start a company who get along great and who say, "Everything will work out fine," there can still be disputes after the fact. It is good to have everything clarified beforehand.

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