Basics Of Due Diligence In Contract Law

Performing your due diligence as a business owner before you enter into a contractual agreement with a vendor or other company is mandatory for a successful venture and avoid unnecessary litigation. Without it, you risk your company’s long-term health. One bad deal could cost your business hundreds of thousands of dollars – so how do you prevent it? Below are a few tips every owner or decision maker for a company should employ before entering into any legal agreement with another person or entity.

Do a Basic Google Search

Run a basic Google search for the company or vendor you’re about to enter into a contract with to make sure they exist. Employ multiple search engines, including Bing or Yahoo!, to be certain you’re dealing with a real company with real employees and products for sale. The last thing you want is to cut a large check to a group posing as a business only to have your money stolen and no products delivered. If you’re not confident, that the vendor or supplier is running a legitimate business, back out of the deal immediately.

Check for Patent or Trademark Filings

Corporate espionage is prevalent, and it can cost the business in lost revenue. Run the names of the company and business owners through U.S. Patent and Trademark Office’s website to find out if they’re associated with any new filings. This can help eliminate any interactions with potential competitors who are only looking to steal your company’s ideas and bring them to market before you get the chance. Don’t allow underhanded companies to ruin your business with illegal tactics.

Consumer Complaint Websites

The Internet is a feeding ground for businesses and consumers alike who have complaints about their dealings with vendors or retailers. Check out the Better Business Bureau and Yelp for honest reviews of business performance as well as a history of formal complaints made against them. A company with a laundry list of angry customers isn’t one your company should do business with generally. Keep in mind that any business can pay for a BBB A+ rating, so a squeaky clean record doesn’t necessarily mean the company you’re dealing with has never underperformed for a client.

Criminal Record Searches

A search of country or state police databases can reveal a host of information about those your business is considering for a contractual agreement. The presence of a criminal record, particularly fraud or embezzlement related to business activity, on the individuals involved on the other side of the agreement is a red flag to walk away. You don’t want to get money stolen from your business or end up in a situation where you’re testifying about someone’s alleged illegal activity. Just get out of the deal and sign nothing.

If you have questions about a contract or want experienced legal professionals handling contract language or negotiations for your business, contact my law firm today.
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