№ AUSTTX
DS
Attorney
Derek Sullivan
Sullivan & Associates
Business LawIntellectual Property
- City
- Austin
Business Law · Sub-Practice
Business Contracts & Agreements
A contract is only as useful as its weakest clause. Most contracts are weakest exactly where disputes are most likely.
§ Overview
What your situation actually involves.
Business contracts govern nearly every commercial relationship — with customers, vendors, employees, partners, and investors. Poorly drafted agreements create disputes. Well-drafted ones prevent them.
Business contracts span a wide range: service agreements and statements of work, vendor and supplier contracts, software licensing and SaaS agreements, NDAs and confidentiality agreements, employment agreements and independent contractor agreements, partnership and joint venture agreements, commercial leases, and customer terms of service. An attorney who reviews or drafts contracts does more than make sure the basic terms are captured — they identify gaps in the agreement (what happens when X occurs?), negotiate provisions that shift risk appropriately, ensure payment and termination mechanics work in practice, flag jurisdiction and choice-of-law issues, and ensure indemnification and limitation of liability clauses actually protect the client. The most common mistake is using template agreements for situations that aren't actually template situations.
§ Key considerations
- ▸Parties and signatures — who is bound by the contract, and in what capacity
- ▸Payment terms — invoicing, late payment, disputed invoices, and consequences
- ▸Scope definition — what is and isn't included, and how changes are handled
- ▸IP ownership — work-for-hire, licenses, and pre-existing IP carve-outs
- ▸Limitation of liability and indemnification — who bears the risk of various failure modes
- ▸Termination rights — how either party can exit, and what happens to ongoing obligations
§ How attorneys approach this
- ›Identifying the purpose and risk profile of the agreement
- ›Drafting or reviewing terms to reflect the actual commercial deal
- ›Negotiating against the other party's proposed form
- ›Ensuring enforceability in the relevant jurisdiction
- ›Integrating signature, delivery, and record-keeping mechanics
- ›Advising on ongoing compliance with contract obligations
“The most dangerous contracts are the ones that seem routine. NDAs with broad non-solicitation clauses buried in them. Independent contractor agreements that expose you to worker misclassification liability. SaaS terms that give the vendor rights to your data you never intended to grant. "Standard" customer contracts with unlimited indemnification. The pattern is always the same: someone signed a template without reading it carefully, then discovered the problem when it was too late to fix. A one-hour attorney review of a recurring contract form costs far less than the first dispute it prevents.”
§ What to look for in an attorney
- 01Industry familiarity — a SaaS agreement requires different knowledge than a construction contract
- 02Negotiation experience — reviewing your own draft is different from negotiating against a sophisticated counterparty
- 03Risk allocation clarity — the attorney should explain specifically what each clause does for you
- 04Template vs. custom judgment — knowing when boilerplate is fine and when it's a liability
- 05Speed and responsiveness — commercial deals move fast and a slow attorney loses deals
- 06Flat fee or capped fee options for standard contracts — predictable pricing for predictable work
⚖️
§ Ask these at your consultation
6 questions that matter
- ❓What are the highest-risk clauses in this agreement — and are they in my favor?
- 💰How does liability get allocated if something goes wrong?
- 🔍What happens to IP created during the engagement — who owns it?
- 📋What are my termination rights, and what are the consequences of exercising them?
- 💬Are there any provisions I should push back on in the other party's standard form?
- 💡Is this contract enforceable in my state, or does the choice-of-law clause matter?
§ Frequently asked questions
Common questions about business contracts & agreements.
Q 01
Do contracts need to be in writing to be enforceable?
Not always — many verbal agreements are legally binding. However, certain contracts must be in writing to be enforceable under the Statute of Frauds: contracts for the sale of real estate, agreements that can't be performed within one year, contracts for goods over $500 (under the UCC), and others. Written contracts are strongly preferred even when not legally required because they provide evidence of what was agreed, reduce ambiguity about terms, and are dramatically easier to enforce or defend in litigation. "If it's not in writing, it didn't happen" is good business practice.
Q 02
What is an indemnification clause and why does it matter?
An indemnification clause is a provision where one party agrees to cover the other's losses, legal fees, and damages in specified circumstances. For example, a vendor might indemnify a client if the vendor's product causes third-party IP infringement claims. Indemnification clauses are often the most heavily negotiated provisions in a commercial contract because they can shift unlimited liability. Red flags: unlimited indemnification obligations, indemnification triggered by acts of the other party or circumstances outside your control, and broad "arising out of the agreement" language. A well-drafted clause should be mutual, capped, and tied to the specific risk being allocated.
Q 03
What's the difference between an employee and an independent contractor?
The distinction matters enormously — misclassification exposes businesses to back taxes, benefits liability, penalties, and wage claims. Courts and the IRS use multiple factors: does the worker control how they do the work (contractor) or just the result? Is the work central to the business's core operations? Does the worker have other clients? Is the relationship permanent or project-specific? California's AB5 applies a stricter ABC test. Calling someone a "contractor" in the agreement doesn't make them one if the economic reality looks like employment. An attorney can review your specific situation and help structure the relationship and documentation correctly.
Q 04
Can I use a contract template I found online?
You can, and sometimes it's fine — for very simple, low-stakes agreements. But template contracts are written for an average situation and yours may not be average. They often have provisions that are favorable to whoever published the template, miss industry-specific requirements, use the wrong governing law, or contain outdated or unenforceable terms. Before using a template for anything consequential — a significant customer agreement, a partnership arrangement, a vendor contract with meaningful liability — have an attorney review and customize it. The review cost is usually a fraction of what fixing a bad template costs after a dispute.
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