5 Common Contract Mistakes That Cost Small Businesses Thousands

Hi, I’m Jane Mure, a business lawyer based in Miami. If you run a small business, contracts are part of everyday life — whether you’re hiring vendors, working with clients, or entering into service agreements. But some of the most costly legal mistakes I see come from small business owners who didn’t fully understand what they were signing.

Here are five common contract mistakes that can end up costing your business big:

1. Signing Without Talking to a Lawyer

This is the most frequent mistake I see. Business owners make a deal, shake hands, and assume the written contract matches their understanding. But during a dispute, they discover clauses they never expected — and those terms can make or break your case.

Even if you think there's no room for negotiation, it's still worth having a lawyer review the contract before you sign. A quick legal review could save you thousands down the road.

2. Ignoring the Choice of Law and Venue

Every contract should clearly state where legal disputes will be resolved and which state's laws will apply. You might be operating in Miami, but your contract could say disputes are handled under Delaware law. That could mean added travel, unfamiliar legal procedures, and extra costs.

Always check — and understand — the jurisdiction listed in your contracts.

3. Accepting Arbitration Clauses Without Question

Arbitration clauses are often slipped into agreements with larger companies — think credit card providers or telecom firms. These clauses force disputes into arbitration instead of court. While arbitration can be faster, it often comes with high filing fees and private costs for judges and staff.

If your dispute were handled in a local court like Miami-Dade County Court, your tax dollars would cover much of that cost. Arbitration, on the other hand, shifts those expenses onto you. Be cautious about agreeing to it.

4. Overlooking Liability Waivers

Liability waivers limit your ability to sue the other party if something goes wrong. Sometimes, the waiver only applies up to the amount you paid. Other times, it may waive your right to sue entirely.

These waivers can be difficult to challenge once signed. Always read carefully, and try to avoid signing contracts that include overly broad liability waivers.

5. Not Spotting Limitations on Damages

Similar to a liability waiver, a limitation of damages clause caps how much you can recover in a dispute. For example, it might say that you can’t recover more than the value of the contract or an insurance policy limit — even if your actual damages far exceed that.

Without this clause, you might be able to sue for full compensation. With it, your recovery could be drastically limited.

Final Thoughts

Before you sign any business contract, take a few minutes to look for these five red flags. Better yet, have a lawyer review it. The cost of a quick legal consult is minimal compared to the potential expense of getting stuck in a bad contract.

If you're a small business owner in Miami and need help reviewing or drafting contracts, reach out — I'm here to help you protect what you’ve built.

Need help reviewing or drafting your contract? Contact J. Muir & Associates, a Miami Business Law Firm, to protect your business today.