A written contract is your business' first line of defense

Whether your company makes physical goods that consumers purchase or provides some kind of service, you likely enter into agreements with a variety of individuals. From your employees to your clients or customers, there will be a number of people with whom you need to execute contracts.

The more time and skill you take in the creation of those contracts, the more and better protections those documents afford your business. In fact, the contracts you sign are often the simplest and most straightforward way to protect your business from litigation and disappointed prospects.

Ensuring that the contracts you use are modern, accurate and thorough is important to the financial development of your business and its brand. You should also be ready to enforce your contracts if someone violates them.

Contracts should lay out expectations and obligations

When you create a contract, it should be as specific as is possible for the situation and outline the requirements for both parties. From describing exact materials used and dimensions for a product to outlining what effect a service should have, the more detailed your contract is, the better it protects you and the other people who sign it.

When you find yourself in the situation where you believe one party isn't upholding their end of the agreement, whether it's failing to pay or to deliver goods as ordered, referring back to that contract can help give you clarity. Consulting the contract could end the conflict entirely.

If the contract does not specify your expectation in writing, you may not be able to take action against the other party. However, the contract may have specific steps you need to take in order to address a default by the other party.

When someone is clearly in violation of a contract, take action

No one wants to feel like the bad guy or the aggressor in a situation. If you have to be the first to threaten litigation, that may make you feel like you're being overly aggressive or negative. However, if the other party doesn't respond to verbal and written requests to address the issue or breach of contract, taking legal action may be the only way to protect your business's interest.

The sooner you take steps to enforce your rights under the contract, the sooner you can remedy the situation and move on. Sometimes, just filing a lawsuit is enough to motivate the other party to follow through with their obligations to you. Other times, you will have to wait for a judge to hear your case.

Regardless of how an individual contract dispute plays out, you can best protect yourself and your business by drafting accurate contracts with an attorney and being proactive whenever someone violates the terms of your contracts.