Shield Your Legacy: Avoiding Common Contract Mistakes in Washington
The founding of a new business venture in Washington State, particularly within the regulatory jurisdiction of the City of Seattle, represents a high-stakes engagement with one of the most sophisticated and employee-protective legal environments in the United States. While the Pacific Northwest remains a premier destination for growth, the margin for error has narrowed due to recent legislative overhauls and aggressive municipal enforcement. At View Ridge Law, our team is dedicated to providing practical solutions with a holistic outlook to ease the uncertainty of these transitions.
1. Relying on “Handshake Deals” and Oral Agreements
In Seattle’s fast-paced environment, there is a pervasive tendency to rely on oral agreements. While Washington law recognizes that some oral agreements carry weight, proving a breach of a spoken contract is significantly more challenging than enforcing a written one. A critical mistake is failing to identify which agreements must be in writing under Washington’s Statute of Frauds, such as those that cannot be performed within one year or contracts for the sale of real property.
2. Using Generic Online Templates
To minimize costs, small businesses often resort to generic contracts found online. This is frequently a costly mistake, as online templates are rarely tailored to the specific legal climate of Washington and often contain loopholes that render them invalid. Courts in our state have been known to overturn cases based on the interpretation of a single phrase, such as the difference between “hereby assigns” and “hereby agrees to assign”.
3. Failing to Adapt to 2024 Non-Compete Amendments
Perhaps no area of Washington law has undergone more rapid transformation than the regulation of non-competition and non-solicitation agreements. Effective June 6, 2024, Washington expanded the definition of a “noncompetition covenant” to include agreements that “indirectly prohibit” the transaction of business with a customer.
The Notice Requirement:
A frequent procedural mistake is failing to disclose these terms in writing no later than the time of the initial oral or written acceptance of the offer of employment. If a Seattle business presents a non-compete later during onboarding, it is legally void.
4. Mismanaging the Independent Contractor Relationship
Many small businesses misclassify workers to reduce costs, which often triggers audits from the Department of Labor and Industries (L&I).
Seattle-Specific Protections:
Within city limits, the Independent Contractor Protections Ordinance (ICPO) applies to self-employed contractors who expect to receive at least $600 in compensation annually. Businesses often overlook this by failing to aggregate small, recurring payments, leading to statutory penalties and a “rebuttable presumption” of a violation if records are not maintained for three years.
5. Ignoring the Negligence Specificity Rule in Indemnity
Small businesses often use broad boilerplate language, such as “indemnify for any and all losses,” assuming it covers the business’s own negligence. However, Washington courts strictly follow the rule that an indemnity clause will not protect a party against its own negligence unless that intention is expressed in “clear and unequivocal terms”. A poorly drafted clause is often worse than no clause at all, as it provides a false sense of security.
Partner with Our Team
Your business is your legacy, and we are here to help you protect it. View Ridge Law provides skill in drafting and reviewing contracts, handbooks, and policy documents needed to ensure legal compliance. For related needs we do not offer in-house, such as specialized tax strategy or deep forensic accounting, we connect our clients with our trusted referral network.
Contact our team today at 206-703-0764 or reach out online to schedule a consultation.
