Why Every Business Needs a Contract Attorney
Contracts are the foundation of every business relationship. They define what each party is expected to do, when they are expected to do it, what happens if they do not, and how disputes will be resolved. A well-drafted contract prevents misunderstandings, protects your interests, and gives you legal recourse when the other side fails to perform. A poorly drafted contract, or worse, no written contract at all, leaves you exposed to disputes that are expensive, time-consuming, and often avoidable.
At Rausa Russo Law, we draft, review, and negotiate contracts for businesses of all sizes. Whether you need a new agreement for a major vendor relationship, want someone to review a contract that has been presented to you, or are dealing with a counterparty that is not living up to its obligations, we provide the practical legal guidance you need.
Types of Contracts We Handle
Vendor and Supplier Agreements
If your business relies on vendors or suppliers, the terms of those relationships need to be clearly documented. Vendor agreements should address pricing, payment terms, delivery schedules, quality standards, warranties, liability limitations, and termination provisions. We draft these agreements to protect your business from supply disruptions, quality failures, and disputes over pricing or performance.
Service Contracts
Whether you are providing services to clients or engaging service providers, a clear service agreement is essential. These contracts should define the scope of work, deliverables, timelines, compensation, ownership of work product, confidentiality obligations, and the circumstances under which either party can terminate. Ambiguity in any of these areas is an invitation for disputes.
Employment Agreements
Employment agreements go beyond the basic terms of employment. They can include provisions for compensation and benefits, non-compete and non-solicitation covenants, confidentiality and trade secret protections, intellectual property assignment clauses, severance terms, and dispute resolution procedures. New York has specific rules governing the enforceability of restrictive covenants, and getting these provisions right requires an understanding of current state law.
Non-Disclosure Agreements (NDAs)
Before sharing confidential information with potential partners, investors, contractors, or employees, you need an NDA in place. We draft NDAs that clearly define what information is confidential, the obligations of the receiving party, the duration of the obligation, and the remedies available if the agreement is breached. We also review NDAs that are presented to you by other parties, identifying provisions that may be overly broad or unfavorable to your interests.
Licensing Agreements
If your business creates intellectual property, including software, content, designs, or proprietary processes, licensing agreements allow you to monetize that IP while retaining ownership. We draft licensing agreements that specify the scope of the license, territory, duration, royalty or fee structure, quality control requirements, and what happens if the licensee exceeds the scope of the license or fails to meet its obligations.
Partnership and Joint Venture Agreements
When two or more parties come together for a business venture, the terms of that collaboration must be thoroughly documented. Partnership and joint venture agreements address each party's contributions (capital, labor, expertise, IP), how profits and losses are shared, decision-making authority, management responsibilities, exit mechanisms, and dispute resolution. These agreements are especially important because the default rules under New York partnership law may not reflect what the parties actually intend.
Common Contract Pitfalls
We regularly see businesses enter into contracts with problems that could have been easily avoided with proper legal review. The most common pitfalls include:
- Vague or ambiguous terms: Language like "reasonable efforts" or "timely manner" means different things to different people. Contracts should define key terms precisely to prevent disputes about what was actually agreed upon.
- Missing or inadequate termination provisions: Every contract should clearly state how and when either party can end the relationship, what notice is required, and what obligations survive termination. Without these provisions, you may find yourself locked into a relationship you cannot exit.
- Inadequate limitation of liability: Without a cap on damages, a contract dispute can expose your business to liability far exceeding the value of the deal. Limitation of liability and exclusion of consequential damages clauses are standard protections that every business contract should include.
- No dispute resolution clause: If you do not specify how disputes will be resolved, you may end up in court in an inconvenient jurisdiction under unfavorable procedural rules. Contracts should specify whether disputes will be resolved through negotiation, mediation, arbitration, or litigation, and in which jurisdiction.
- Unclear intellectual property ownership: If your business is paying someone to create work product, the contract must clearly assign ownership of that work product to you. Without an explicit assignment clause, the creator may retain ownership even though you paid for the work.
- Failure to address force majeure: Events outside the parties' control, including natural disasters, pandemics, government actions, and supply chain disruptions, can make performance impossible. A force majeure clause specifies what happens in these situations and protects both parties from liability for non-performance caused by extraordinary circumstances.
Never sign a contract without reading and understanding every provision. If the other side pushes you to sign quickly or tells you the contract is "standard" and non-negotiable, those are reasons to be more cautious, not less. Every contract is negotiable, and having an attorney review it before you sign is far less expensive than litigating a dispute after the fact.
Breach of Contract: When the Other Side Fails to Perform
When a party to a contract fails to fulfill its obligations, that is a breach of contract. Under New York law, the non-breaching party may be entitled to several remedies, depending on the nature and severity of the breach:
- Compensatory damages: The most common remedy, designed to put you in the position you would have been in had the contract been performed. This typically includes direct losses and consequential damages that were foreseeable at the time the contract was made.
- Specific performance: In certain cases, particularly involving unique goods or real property, a court may order the breaching party to actually perform its obligations under the contract rather than simply paying damages.
- Rescission: The contract is cancelled, and both parties are restored to their pre-contract positions. This remedy is appropriate when the breach is so fundamental that the entire purpose of the contract has been frustrated.
- Liquidated damages: If the contract includes a liquidated damages clause specifying the amount of damages in the event of a breach, that amount may be enforced if it represents a reasonable estimate of anticipated harm and actual damages would be difficult to calculate.
Under New York law, the statute of limitations for breach of contract claims is six years from the date of the breach. However, acting quickly preserves evidence and strengthens your position.
New York Commercial Law Considerations
New York is one of the most important commercial law jurisdictions in the country, and its laws have some distinctive features that businesses should be aware of:
- UCC Article 2: Contracts for the sale of goods are governed by New York's version of the Uniform Commercial Code, which includes specific rules about contract formation, warranties, risk of loss, and remedies that differ from common law contract principles.
- Choice of law: New York courts generally enforce choice of law provisions, and many national and international contracts specify New York law as the governing law. If your contract includes a New York choice of law provision, understanding New York's specific rules is essential.
- General Obligations Law § 5-701: New York's statute of frauds requires certain contracts to be in writing, including contracts that cannot be performed within one year, contracts for the sale of goods over $500, and agreements to pay the debt of another.
- Prompt payment laws: New York has specific statutes governing payment timelines in certain industries, including construction and government contracts.