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3 tips to avoid vague language in a business contract

On Behalf of | Jul 23, 2021 | Business Law

Whether you are in the early stages of business formation or are developing relationships to further grow your organization, writing strong contracts is crucial. It is common for the owner to favor his or her business in the terms of the contract, but it is important to use clear, concise language detailing the agreements. If the contract relies on vague language, the document can be difficult to enforce.

The consequences of a breach of contract can impact all facets of the business. Here are three tips to remember when drafting a contract:

  • Do not rely on industry jargon: While industry jargon might be a form of shorthand in various conversations, for the purposes of a business contract, it is wise to use the established names, terms and phrases so there is no confusion. If contract enforcement is necessary, it is important to eliminate confusion between the parties in the contract as well as potential misunderstandings through the legal system. When using jargon, some organizations make sure to define the piece of jargon initially or include an agreed-upon glossary of terms at the end of the document.
  • Do not make passing mention to the terms of prior agreements: To save time, some organizations will rely on the factors of prior agreements rather than spelling them out in the new contract. It is wise to specifically detail the terms of the contract within the contract itself, no matter how casual the previous relationship was.
  • Do not leave penalties up for interpretation: A breach of contract can be a serious hazard to your business. From a missed delivery schedule to the delivery of the wrong product, the contract should specifically note the penalties for breaking the terms of the contract.

Businesses of all sizes rely on contracts to ensure the company runs smoothly and efficiently. From employment contracts and non-disclosure agreements to vendor contracts and lease agreements, these documents form the foundation of the organization. Unfortunately, it is not uncommon for the parties to break or breach the terms of a contract. In some instances, the breach is the direct result of a poorly drafted business agreement. Business owners should write the agreement using clear, concise language.