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Business Contract! Same huge mistakes when drafting an agreement:

After over 30 years of representing clients as a lawyer in the California courts, litigating claims for damages in the business contract settings, I can comfortably state the following observations are crucial to success of any good business contracts: If you don't want to "curse the counsel" when you and your "elite" business team fouls up during a year of negotiations with your adversaries then:


a) identify the "source contract" document with as much diligence and details as you can muster. After all, that piece of paper, "Contract" or "Master Plan" or "Master Agreement" is the main framework the judge or jury or arbitrator look for guidance to answer the enigma of "What the hell were you thinking?" question, as they grapple with the wisdom of your current claims.

It is amazing the cultural differences in attitude, that can effect this leg of the process. I have seen and navigated the treacherous waters many a line of agreement over 30 years, and one pops out vividly: a $53 million dollar construction agreement, set out in a 7 page "contract"! Really? No wonder the parties spent nearly $500,000 on each side, just to come to the answer by the Judge as to what was the objective and the identity of the construction site in question! Of course, the lawyers on both sides won!


So....

b) After drafting the agreement, (hopefully with a skillful attorney) gather up and attach the main assumptions, data and the cornerstone presumptions, lettered/emailed exchanges which were used to base the agreement you are signing to the contract itself and name them as exhibits to the agreement. Period.

c) Call in your accountant or the "Number Man" to set out a precise timetable of the dates each stage and the length of each phase is to take place per contract, and the penalties or rewards to meeting or missing such milestones. This is a very crucial step, since what you miss on this stage, your attorney litigator (yours truly!) will be more than happy (and is much expected by the court and the rules of civil procedure and evidence) to reconstruct all of said deadlines, milestones, characters, duties, letters, documents to present ..... you get the picture, for a substantial hourly fee. So do your homework a head of time. Your counsel (again, yours truly) can do this on the legal end of it with you or your team, A HEAD of the signing of the contract NOT after! Think of the contract as the Constitution for your business and those who you deal with... would you give this just to anyone to write it?! So spend a bit more time and money and do it the right way, or.. it will cost you thousand times more later :)


d) Sit down with your team and line item every possible steps realistically that can go wrong with your or the other side in meeting the obligations of the agreement AND articulate it with bullet points! Why? Because if you know how the agreement can fail, then you would have come up with alternative ways to offer solutions and STATE IT SO RIGHT in the contract, which will be giving further guidance to the judge or jury and make your life less miserable during the litigation.


e) When lightning strikes, name which "god" will preside over the dispute! By this, I refer to the age old saying: Seek the "Wise Old One" or the "Shaman reading the bones" to resolve the dispute by arbitration. The arbitration process will be a better forum in my humble expert opinion, in most business settings, to resolve the breaches of contracts and other allegations of wrong. It is the very essence of civilized and efficient way of reaching a solution to a contractual dispute. While arbitration clauses have been interpreted in various jurisdictions with alternating levels of difference, one thing is clear: If the parties unequivocally commit to the arbitration in writing and make it a binding one, the court will breath easier in sending the parties out of the litigation quagmire, to the "Wise Old One", the experienced retired judge or counsel whose is well versed to guide the parties in the nebulous shadows of the law. In sum, presentation of evidence and finding a ruling without the current prolonged march towards the Zoom monitored trials, is much more coherent and productive for all stakeholders.


f) Assign a person or department, whose main job is to clearly and painstakingly follow that you, your company as well as the opposing party, follows each and every element of the contract on a regular interval time/date milestone timeline (yes, I said it, four time words, dates..dates..). One of the most prevalent, items I have noticed in my practice in the last 3 decades in litigation is, how parties become so complacent that each side, depending on the varying degrees of motives and objectives, misses the most basic tenets of their obligations as they perform with reference to dates! And they do so with such recurring attitudes, that the damages due to the breach could have been avoided by ten folds, had someone notified the "boss" to stop and examine the broken wheel, before the entire couch goes off the cliff! That person has to of course be decisive, to call to attention the anomalies, be it by an attorney, project manager or anyone sufficiently familiar with the distinct duties and obligations called for by the contract.


Conclusion - Follow these 6 steps, and I will guarantee your attorney and accountant will love you. The Former, because he would not have to retrace your missteps and listen to you winning about high legal fees, and the later, for not having to issue fat checks to the former for you/your business team's derelictions. And by the way, the photo above refers to the idea, each element of the scene is distinct and separate concept of existence. So is your parcels pressed in your contract! "Long live, and Prosper" and call me when legal lightning strikes :)


Edisson Seropian, Esq.

June 16, 2021

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