In my years of advising businesses as their outside general counsel, I've seen seemingly simple business arrangements spiral into complex legal disputes. One of the most common issues? Uncertainty about whether parties actually have a binding contract and what the terms of said contract actually are. Let me share what you need to know to protect your business interests.

The Surprising Truth About Business Contracts

Many business leaders are surprised to learn that contracts can exist in many forms – not just formal signed documents. Over my career, I've litigated contract disputes involving:

Email chains 

Text messages

This flexibility in contract formation, while useful for business efficiency, can create significant uncertainty when disputes arise.

When Business Relationships Go Wrong

Let me share a recent case that illustrates the problem. Two businesses had been doing business together for years, exchanging emails about pricing, sending purchase orders, and operating on handshake agreements. When a dispute arose about delivery terms, we had to piece together their actual agreement from:

• Hundreds of emails
• Phone call notes
• Past practice evidence
• Draft agreements never signed
• Verbal understandings

The litigation costs far exceeded what it would have cost to properly document their agreement from the start with an integration clause — meaning no verbal understandings or emails prior to the written agreement were included as part of the agreement.

Understanding Contract Formation

The legal requirements for a valid contract seem simple:

Offer  

Acceptance

However, in real business situations, determining whether these elements exist can be surprisingly complex. I regularly see cases where parties thought they had a firm agreement, only to discover they had what courts call an "agreement to agree" – essentially, an understanding to work out details later that may not be legally binding.

The Real Business Impact

The cost of contract uncertainty extends far beyond potential litigation:

• Strained business relationships
• Operational disruptions
• Lost opportunities
• Resource drain
• Reputational damage

Best Practices for Business Agreements

After years of seeing what works – and what leads to litigation – here are my recommendations for protecting your business:

Centralize Your Agreements

Create a single, accessible location for all business agreements. This seems simple, but I've seen companies waste countless hours and resources searching through emails, servers, and filing cabinets during disputes.

Use Written Contracts 

While not every business interaction needs a formal contract, significant business arrangements deserve proper documentation. Focus on:

• Clear deliverables and expectations
• Pricing and payment terms
• Timeline and deadlines
• Change management process
• Dispute resolution procedures

Do Not Pull Your Contract From Google

Do not provide the other side or sign a contract with terms that you do not understand. Do not sign a contract that has conflicting terms. If you or your lawyer did not draft the language or you do not know what something within the contract means — that is a problem, which will lead to bigger problems. 

Maintain Clear Communication

Be explicit about whether discussions are final agreements or just preliminary negotiations. I've seen too many cases where parties had different understandings about whether they had reached a binding agreement.

The Prevention Advantage

The time to clarify your agreements is when relationships are good and everyone's aligned. As a litigator, I can tell you that trying to piece together contract terms after a dispute arises is:

• More expensive
• More time-consuming
• More uncertain
• More damaging to relationships

Taking Action: Protecting Your Business

Review your current business relationships. Are your agreements clearly documented? Could you quickly find and understand your obligations if a dispute arose? If not, it's time to implement better practices.

The Value of Strategic Thinking

Contract clarity isn't just about legal protection – it's about business efficiency. Clear agreements help you:

• Make better business decisions
• Manage relationships effectively
• Plan for growth
• Reduce operational risks

Moving Forward

Don't wait for a dispute to discover gaps in your contract documentation. At Michael Best, we help businesses implement practical solutions to prevent contract disputes before they arise.

Contact Adam Witkov to discuss how we can help protect your business interests through better contract practices.