Law Office of Hayes & Welsh

When Things Go Wrong Between Outside Service Vendors

It doesn't matter what type of industry or sector your business is based in, there's a good chance you are going to have to form partnerships and enter into contractual agreements with other businesses in order to succeed and grow. This is part of being a business owner, but that doesn't mean that it's simple. Legally-binding contracts need to be well-written and enforceable, and the goal of these contracts is to create them to be mutually beneficial for both parties involved.

Contractual Partners Shouldn't Be Competing, But They Often Are

While this is the goal when it comes to developing business contracts, the reality is that contract disputes are all-too common in business. Take retail-giant Walgreens, for example. This is a healthcare retailer who provides pharmaceutical supplies, health products and convenience items to consumers across the country, and it's working to re-brand itself as an innovative healthcare retailer that offers cutting-edge technology to its customers.

With this branding concept in mind, Walgreens entered into a contract with Theranos. Theranos is a healthcare company that told Walgreens officials that it offered innovative blood-screening testing that was revolutionary to the healthcare industry as a whole. As a result of the contract, dozens of Theranos blood testing centers were established within Walgreens retail locations - only for Walgreens to realize that the company had misled them as to the actual benefits and purpose of the testing facilities.

According to MedCityNews, the retailer severed ties with Theranos, quickly closing all of its blood testing centers that were located within Walgreens units. Shortly after that, Walgreens filed a breach of contract lawsuit against Theranos, demanding that the company provide $140 million in damages as a result. Unfortunately for Theranos, this isn't the only company seeking a breach of contract lawsuit against it. Partner Fund Management, a company that invested in Theranos, also declared that the company had been misleading in its initial stages. The fund management company filed a formal complaint against the company and is seeking damages after investing more than $96 million into the company which claimed to be revolutionizing blood testing.

Contract Disputes Can Be Avoided By Getting An Attorney Involved Early

The lawsuit serves as a warning to many healthcare companies, who have considered investing in health care technology that allegedly improves the process for both patients and providers. Beyond that, it also proves that it's critical to work with an experienced business attorney when drafting contracts and exploring possible business partnership agreements.

When creating a supply or sales contract, here are a few things that need to be considered:

  • Never leave anything off of the contract. A qualified legal professional will ensure that you have all of your bases covered when you are drafting your contract. Everything needs to be in writing, and written in the exact legal language that will make the contract both binding and enforceable.
  • Outline any payment processes that will be included as part of the contract. Work with your lawyer in order to be sure that the contract clearly states who will be paying, at which time payment is due, how much the payments need to be, whether they will be recurring payments, and the form payment that is required for the transaction.
  • Identify what needs to happen in the event of a dispute. In many business contracts, arbitration is required as a way of resolving disputes. This is due to the fact that arbitration can be a less expensive resolution method than litigation. However, your legal team can help you assess which revisions need to be put in place in order to best protect your assets.
  • Verify that the contract will be confidential. This is an important business document, and its contents should remain between the two parties involved in the contract.

Prior to entering into any contractual agreement with another business, you should contact a business law professional who can help you create an effective contract. When you develop a partnership with a qualified lawyer who specializes in contracts and business litigation, you will be able to rely on their expertise and knowledge as you navigate through any issues with your business partner. In the event of a dispute, you will know that you have a legal team on your side who will advocate for your needs and rights as a business owner.

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Law Office of Hayes & Welsh

Law Office of Hayes & Welsh
199 North Arroyo Grande Blvd
Suite 200
Henderson, NV 89074

Phone: 702-434-3444
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