Dispute may be an unavoidable part of business ownership, but litigation does not have to be. Savvy business owners are aware that litigation is time-consuming and expensive. Not to mention, litigation can completely ruin otherwise valuable business contacts and it takes focus away from building your business.
One of the best ways to avoid litigation in the first place is by ensuring that your contractual language is clear. According to FindLaw, incorporating risk shifting and litigation avoidance provisions into your contracts can help you avoid litigation before it begins.
What are some litigation avoidance provisions?
Many litigation avoidance provisions focus on requiring frequent communication between contracted parties. For instance, including mandatory mediation or arbitration provisions can slow the process to litigation. Agreeing to fact-finding or neutral evaluation is also a great way to prevent disputes from ending up in court.
Another way to avoid litigation is to require a partnership approach. This is where contracted parties agree to work as a team to avoid disputes by means of improving communications. A lot of the time, litigation occurs because one party simply does not respond to the other party’s communications. Specifically making communications required and prioritized in your contractual language can help avoid this.
What are some risk shifting provisions?
Common risk shifting provisions include things like exculpatory agreements, waivers, disclaimers and releases. Risk shifting may also involve certain insurance provisions, depending on the nature of your business.
Overall, one of the best ways to avoid court is to ensure that your contractual language is crystal clear and that both parties commit to open and frequent communication.
