What provisions can we build into contracts to avoid litigation?

| May 18, 2021 | Business

Avoiding litigation is a key concern of many business owners. Litigation is expensive and time-consuming. Litigation can also cost you important business contracts. Therefore, it is wise to avoid litigation well before it starts.

Conflict may be an inevitable side effect of doing business, but litigation does not have to be. According to FindLaw, there are many ways to avoid litigation before it starts by implementing an expedited review procedure and incorporating risk-shifting and litigation avoidance provisions into contracts.

Tips for an expedited review procedure

The first step is creating a process by which you and your business partners can identify any potential problems or risks before they are unavoidable. For instance, creating a comprehensive reporting procedure that encourages employees to report risks to upper management often catches problems before they manifest.

Adequate follow-up to potential problems also ensures that no potential disagreement festers unattended. Keeping all transactions between yourself and any business partners as clear as possible makes for good business relationships.

Risk-shifting and litigation avoidance

Often, a good business relationship starts with solid contract writing. Examples of litigation avoidance provisions that you can put into your contracts include mandatory mediation provisions or arbitration provisions. You can also agree in advance to allow outside expert opinions to bind any final decisions.

There are also multiple risk shifting avoidance provisions that you can put into your contracts. You may want to consider adding disclaimer and waiver language to any contract that you sign. Insurance provisions and escopitory agreements may also be a wise addition depending on the nature of your agreement.