Last Updated on Apr 14, 2020 by James W
When you are signing any sort of contract, there is always a degree of concern involved. The whole purpose of it is to keep you to some specific terms, so you need to make sure you fully understand the agreement that you are entering into. However, there may be ways to reduce your liability, and these are what we will be looking at in this article. We are going to be taking four examples of times that you may sign a contract and outline some ways that you can better protect yourself.
Liability for Business Debts
Before you launch any sort of business, think closely about the type that you are going to set up. For example, corporations are owned by shareholders and you can be shielded from personal responsibility. However, sole proprietorships are legally indistinct from the owners, meaning that you will end up personally responsible for business debts. When you are entering into any sort of business relationship, do so carefully, and back yourself up where possible with surety bonds and other protective measures. Review contracts with your legal representatives to ensure that you are happy with what is being proposed.
Protecting Assets When Loan Cosigning
If you are going to cosign a loan, you need to be as sure as you possibly can be that the person will be able to pay it back again. Ask to see their credit history, discuss their job situation, and hire a lawyer to protect your interests if you want to be especially careful. When the loan agreement is presented to you, ensure that you read it thoroughly. Ask to be made aware of any late payment notices so you can take action at the earliest possible opportunity. At some point during the repayment timeline, you can ask to be removed from the contract.
Signing General Contracts
Oral contracts tend to be binding contracts, but as there is no paper trail to be found, they can prove to be problematic. Be careful of indemnification clauses which shift responsibility between the different parties involved in the signing of a contract. Ultimately, if you are unsure of anything, it is worth reviewing it with an attorney. If possible, ask for a referral from someone that you trust so you can be confident in your legal representation. You may even be able to negotiate better terms, so this is an option that is always worth looking into closer. Of course, there are some situations which you aren’t given the opportunity to negotiate – buying something online is one of them. Retain a copy of anything that you sign and be especially careful of contracts with blank spaces which can be filled in at a later date. Depending on the individual circumstances, you may be able to protect yourself further by purchasing indemnity insurance.
Nowadays, people tend to be willing to sign contracts without properly reading and researching them. However, this is a recipe for disaster, so make sure that you know your rights and responsibilities before entering any sort of agreement.