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5 issues that could make your contracts invalid

Business owners across Kentucky know that success or failure can depend on the quality of the relationships they build, whether the relationships are with their customers, their employees or their partners.

In many cases, these relationships are defined with a contractual agreement. Such a document provides critical guidance and protection, so it is important that every contract be drafted properly and with the help of a legal representative. Failure to do this could lead to costly disputes, cancelled contracts and unenforceable terms. Below are five common issues that you want to be sure you avoid when drafting or signing any contract.

  1. Including vague terms: Specificity is crucial when interpreting and enforcing a contract. If the terms are unclear or very broad, then this could make it easier for parties to challenge the document.
  2. One or both parties did not agree on all major issues: As noted in this Forbes article about what makes a contract legally valid, both parties must agree to the contract. Situations can arise where one party thinks they are under contract while the other thinks they are still in discussions over the agreement, which can cause legal disputes.
  3. Including unconscionable terms: Clauses may be dismissed if they are unreasonable or excessively unfair.
  4. One party is unfit to enter into a contract: If a party does not have the legal standing or capacity to understand a contract, or if a party is coerced or manipulated into signing the contract, then the document can be unenforceable.
  5. Engaging in legal misconduct: If negotiations involve fraud or misrepresentation of the facts or participants, the resulting contract can be deemed invalid. If there are clauses that violate a person's rights or go against public policy, those clauses can be dismissed.

These and other issues can jeopardize the validity of a contract and ultimately make it (or certain clauses) invalid. 

To avoid the expensive, contentions and often-avoidable complications that can arise from these situations, it can be critical that business owners review legal documents with an attorney before signing anything.

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