Know Your Exit Strategy Before You Sign A Contract

Contracts not only include the specific terms that make up the deal but also how disputes between the parties will be resolved. While many people believe large portions of the contract to be simple boilerplate, the failure to properly understand all of the terms of a contract can lead to a big surprise if there is a breach of the contract or any other contract related dispute. Before signing any contract, make sure to understand how the following topics will be addressed:

The vast majority of lawsuits are settled. Early attempts at settlement can save you the costs of protracted litigation. By requiring mediation first, you are giving yourself an opportunity to resolve the dispute before incurring substantial attorneys’ fees and court costs. Many contracts also use attorneys’ fees as an incentive to mediate, stating that the filing of a lawsuit before requesting mediation waives that party’s right to collect its attorney fees.

A great way to discourage frivolous lawsuits is to require the loser of the lawsuit to pay the winner’s legal fees. Contract language should be broad and allow attorneys’ fees to the prevailing party in any dispute arising from or related to the contract.

The decision to have a dispute decided in arbitration as opposed to court trial (litigation) is an important one. While arbitration can save you time, it can be more expensive since you must also pay the arbitrator’s fees. In addition, by agreeing to arbitration you give up your right to appeal leaving bias as the only grounds to reverse a decision. On the other hand, this same point could be described as a final enforceable decision that will once and for all end a dispute.

Knowing both what you are getting into and how to get out of it are important considerations when entering into any contract.

Amir H. Afsar, Esq. is an attorney and founder of Afsar Law Group, A.P.C. which represents clients in business, real estate, construction, and estate planning matters throughout the Coachella Valley including Indio, La Quinta, Bermuda Dunes, Indian Wells, Palm Desert, Rancho Mirage, Cathedral City, Palm Springs, Banning, Joshua Tree, and other cities located within Riverside and San Bernardino County. Mr. Afsar can be reached at Afsar Law Group, A.P.C. at 760.345.3110.

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