The general rule in Virginia is that a business contract will be enforced as written. The fact that it may seem unfair to one party rarely matters; in Virginia businesses are generally allowed to enter into whatever contracts they wish, no matter how unwise, and the contracts will generally be enforced.
This can make it dangerous to enter into a contract without legal advice.
Many people do not realize that in a contract dispute, no attorney’s fees will be awarded to the winner unless the contract specifically says so. This can prevent a business from resolving a dispute in court as litigation may not be cost effective; the cost of an attorney might exceed the amount in dispute. There are restrictions on when a business owner can represent the business in court without an attorney, and, even where it is allowed, it may be a very bad idea. A well drafted contract will address this and provide that the winner in a lawsuit will be awarded attorney’s fees.
Another matter which should be addressed is the exposure under a contract. Most of our clients want to know what their exposure is, in advance. Clear limits of liability can be stated in the contract, allowing the business owner to know, in advance, what his or her risks are.
Many people do not realize that, unless the contract provides otherwise, a Court will not generally order a defaulting party to perform as called for in the contract. This is called “specific performance” and is not necessarily available. Instead, the Court will give the winning party a money judgment against the losing party. This may or may not make the winning party whole, and it may or may not be collectable. Contract enforcement should be considered when drafting a contract.
At Rice & Stallknecht, P.C., we have over 25 years’ experience drafting contracts to address these and many other issues to meet our clients’ needs.