This guide will summarize a few important key steps in drafting an agreement to avoid future litigation, or reduce the risk involved if litigation does arise.
Clarity is King
When drafting an agreement, one of the most important things to keep in mind is avoiding ambiguity. In order to avoid future problems, make sure your agreement is as clear as can possibly be. Lawsuits often arise from unclear provisions in agreements.
It is shockingly common for agreements to mistakenly include incorrect parties. If you are drafting any agreement, you should be aware that business organizations (corporations, LLCs, LLPs, etc.) generally enjoy a distinct identity from their owners. When you are entering into an agreement on behalf of an entity, make sure that the entity is the party to the agreement (you will, of course, be signing "on behalf" of the entity, but that is very different from signing in your own individual capacity).
Attorneys' Fee Provision
Under the "American Rule" (which applies in Florida and many other jurisdictions), each party to a dispute is responsible for their own legal fees. Contrary to popular belief, the winner in a lawsuit does not always get to recover their attorneys' fees from the loser. However, that can be modified by statute or contract. Many statutes, such as consumer protection laws, insurance statutes, and others, provide for "prevailing party attorneys' fees." When drafting an agreement, choosing whether to include an attorneys' fee provision is an important consideration. Typically the parties to an agreement will want the losing party in a future lawsuit to pay the winning party's attorneys' fees; if this is the case, make sure the agreement clearly includes an attorneys' fee provision.
Choice of Law and Venue
In order to avoid any future problems about where a lawsuit should be brought in the event of a dispute, it is a good idea to include both "choice of law" and "venue" provisions. A choice of law provision is an agreement that the laws of a particular jurisdiction (i.e. Florida) will govern the agreement. A venue provision is an agreement by the parties that any dispute should be brought in a court in a certain location (i.e. "Any dispute to enforce this agreement shall be brought in a court of competent jurisdiction in Miami-Dade County, Florida.").
An integration clause (also known as a "merger clause") is a statement that all of the agreements and understandings between the parties concerning the subject matter of the agreement are contained within the agreement. The purpose of an integration clause is to reduce the risk of a party later claiming that there are other terms of the agreement that are not contained in the written agreement.
Seek Legal Counsel
Unfortunately for clients, litigation is almost always an expensive proposition. For that reason, we always recommend that parties contemplating entering into any agreement seek legal counsel to assist in its drafting and negotiation. Very often clients try to save money and draft agreements on their own without the advice of counsel and later regret that decision once they are forced to spend large amounts of money litigating over the contract. To avoid future problems, seek competent legal counsel to assist with your written agreements.
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