Business Contracts and Agreements
Factors to Consider When Drafting Contracts
For business owners, contracts are nothing new. For each contract you may encounter, there are basic components and factors that influence the process of drafting and negotiating a contract, including:
The relationship between the contracting parties.
Each contracting party's negotiating leverage.
The size and scope of the transaction, including jurisdiction, territory.
Whether the arrangement is exclusive or non-exclusive.
The creditworthiness of the contacting parties.
The reputation of the contracting parties.
Each party's risk tolerance.
How standardized are the contract process.
Relevant antitrust and compliance considerations, such as vertical, horizontal, and price discrimination issues.
Which party is more likely to breach the agreement.
Any interplay or conflict between the agreement and other contractual arrangements.
Before drafting or reviewing any contract, your attorneys will consider these factors and review all key deal terms with the appropriate business executives.
It is important to consider the cascading effects that making a change to one provision may have on other provisions in the agreement, and to discuss any resulting effects of a proposed change with the appropriate business executives.