A business idea is no good unless executed effectively. A successful business will primarily have 3 main pillars, a product or a service, a team and money. But it also has a silent pillar, which is legal. I would argue the most important of all. This is a fundamental stone supporting the entire wall. Many entrepreneurs consider legal team a liability until electrified by a statutory penalty wiping out their entire capital, an event of default resulting into claw back of investments or an uncapped indemnity claim. A business owner can prevent any unfortunate legal action coming its way, if the interest of the business is protected from the initial stage. This layer of protection is given by well drafted and negotiated contracts!

It’s an old saying but true – “Prevention is better than cure”. Contracts are extremely important and often play a pivotal role in a business’s success. As a result, business owners should always ensure they have an effective contract in place, before undertaking a business action. But does a mere out of context template draft downloaded from the internet or an old draft executed with another client will be sufficient to protect business interest? NO. A BIG FAT NO. Many business owners practice this and when land into contract disputes, they blame the law or the lawyer representing them. Well, in this case, there is no one but the business owner to be blamed. You cannot simply put to use a creation of CTRL + C and CTRL + V, when it comes to contracting. However, in some cases, a template contract downloaded from the internet may be useful, if crafted as per the business requirements of the contracting parties, scope of the arrangement and by careful analysis of the applicable laws.

It is extremely crucial for business owners to understand that each transaction is peculiar and unique and requires a careful review by a contracts attorney. Each contract has to be looked at from the perspective of the nature of transaction involved and the substantive law regulating such transaction. For instance, while a sub-license of a software may be permitted but a sub-license of an immovable property is prohibited under the Indian law. The above example highlights a small but important legal complication that may throw away the entire contracting process and render the transaction unenforceable. To avoid these common mistakes, you may want to work with a contracts attorney to ensure your next contract is both effective and enforceable.