Contracts in Long-Term Business-to-Business Relationships.
- posted: Aug. 30, 2021
In consistent or long-term business-to-business (B2B) transactions, the contract is vitally important because both businesses are repeatedly benefiting from the deal, and both businesses will continue to benefit from that deal until it is terminated. You don’t want a fruitful relationship to fall apart because the other business suddenly decided to take advantage of an ambiguity in the contract, but you also don’t want it to fall apart because the other business took advantage of an otherwise-harmless technicality. It is important to find a middle ground where the relationship is clearly defined, but the parties are provided with enough wiggle room for ‘good faith.’
However, you should never rely on good faith alone. ‘Good faith’ may be that a contract doesn’t terminate upon a late payment, but instead a penalty will be applied. In other words, if a payment is due on October 1 but is not delivered until October 10, the unpaid party is still, in good faith, expected to abide by all other terms in the contract between October 1 and October 10. Typically, when dealing with standalone contracts or consumer contracts, relying on good faith is a no-no.
Additionally, if a long-term B2B relationship does fall apart, both sides are going to want to ensure that they will be able to find replacements. This is why many of these contracts should include ‘notice of termination provisions,’ meaning if one business wishes to terminate the relationship, the parties must continue to abide by the contract for a period of time (i.e., 30, 60, or 90 days) before the relationship can actually terminate. This clause is especially important for businesses that only have a handful of clients at any given time, as those businesses’ operating costs are going to be significantly more reliant upon a single client.
Romaguera Law Group has extensive experience in drafting, reviewing, and negotiating long-term business-to-business contracts. We also have experience in litigating these types of contracts, and lawsuits stemming from long-term business relationships are costly, time-consuming, and risky.
There is no formula to creating a perfect contract in long-term business-to-business relationships. These contracts should be narrowly tailored and specifically drafted based upon the price, product, and production.
The safest way to determine your business’s needs is by contacting a Florida business attorney. Romaguera Law Group offers 100% FREE consultations and evaluations.
Romaguera Law Group represents many small- to medium-sized businesses in the State of Florida, and we follow the same general goals with each contract:
(1)Contract protects the client to the fullest extent plausible;
(2)Contract discourages the other party from suing the client;
(3)If the client has to file a lawsuit, the Contract language should make that lawsuit simple, quick, and efficient; and
(4)When the client wins the lawsuit, the other party must reimburse the client for its attorneys’ fees and court costs.