Utilizing Business Agreements As A Deterrent To Lawsuits And As An Offensive Weapon

Despite the inherent usefulness of service agreements and/or purchase agreements in memorializing the terms of a transaction between businesses (“Business to Business” or “B2B”), or between businesses and their customers (“Business to Customer” or “B2C”), many entrepreneurs forego having these documents drafted. From our experience, the primary reason for delaying or altogether avoiding having a formal agreement drafted for their business dealings is one of cost. Unfortunately, clients who do not have effective agreements and who find themselves in a B2B or B2C dispute are at a drastic disadvantage once they find themselves in the negotiation or litigation.
 
One of the primary benefits of effective agreements is the impact they have on litigation, or a situation that may give rise to litigation. A well-drafted service agreement or purchase agreement will lay out all the material terms for a service based business, and will ideally leave no “grey area” for the parties to dispute. Although litigation sometimes arises because of outright wrongdoing by one party, lawsuits also often arise because of a misunderstanding of the terms of an agreement between the parties. This most often occurs where the agreement between the parties is never memorialized by a writing (an oral agreement), or where the parties use an agreement that is not specifically tailored to their business. The most common example of this is finding a service agreement from the Internet and modifying it in an attempt to tailor it to the needs of the business.
 
Despite the  perceived initial cost savings, these patchwork agreements fail to address key areas that give rise to disputes. Although it may be difficult to rationalize shouldering the cost of a formal agreement as a business owner, the cost of preparing an agreement to protect your business is small in comparison to having your business involved in disadvantageous litigation.
 
Beyond the protective aspects of these agreements, a service agreement or purchase agreement is often a business’ best weapon in taking action to collect a receivable or right a wrong. A well-drafted agreement will specifically define the terms of the agreement between the parties. This is of utmost importance. First, the mere existence of a well drafted agreement will almost always cause customers and suppliers to live by it without a lawsuit. If there has to be lawsuit, the chances of good result are much better with a soundly written agreement. In these situations, litigation may be avoidable, allowing the parties to negotiate a resolution without the expensive legal fees associated with business litigation.

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The Firm, deeply rooted in Livingston County, has its origins in 1994 when it was founded by Tim Williams.  After having practiced predominantly in tax law for many years with larger firms, Tim decided to start a new firm that centered around working with people rather than with only highly complex tax issues. The Firm is centered in working with entrepreneurs and individuals with a personal touch.  The goal of the Firm has always been to create a relationship-driven rapport with its clients to establish long-lasting, personal relationships.  From the time it was founded, the Firm has specialized in business law and estate planning and probate practice.  Many of the Firm’s clients rely upon its attorneys for business guidance as well as legal counselling. The Firm has always made it a priority to devote time to giving back to the Livingston County community and its residents by working with and giving to charitable and service organizations.  The firm plans to continue to grow its client base in Livingston County and the surrounding areas.

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