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The power of contracts

Business contracts are packed with provisions that detail the specific obligations of all parties involved. It is easy for companies in Florida, however, to misinterpret legal jargon, but what is the cost of completely disregarding a prior agreement?

After losing a high-profile battle with Google earlier this year, Oracle Corporation is now facing a damages order, according to Bloomberg News. The five-year contract dispute with Hewlett Packard surfaced back in 2011 when Oracle stopped developing software to support the Itanium chip. HP, claiming to have taken a big hit from the phase-out, sued the software company for violating the contract. The judge in the bench trial ruled that there was indeed an agreement between the two companies, and the 2016 jury confirmed the breach of contract claim. As a result of the ruling, Oracle has been ordered to pay over $3 billion to HP.

Legal contracts outline nearly every possible scenario, and misinterpretation often costs more money in the end. In fact, The Florida Bar points out that the state does not allow some documents to be drafted by anyone who is not a licensed attorney. This is due to the fact that contracts often involve significant consequences and the law regarding contracts is difficult to understand. For example, a Miami contractor ignores this distinction and completes a building two days behind schedule. Depending on the terms of the contract in place, the contractor may  have inadvertently agreed to pay for any breach of the agreement – failing to complete the project by the designated date.

In simple terms, contracting involves both an offer and acceptance. Of course, the concept is much more complicated in the corporate world where even CEOs may not fully understand what they are signing.

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