How To Recover From a Business Legal Mistake

Sometimes there is no going back – what’s written in ink is the law. But there is one way to fix legal mistakes that nobody thinks about.

When I decided to write this article I became very curious about what business owners believe regarding legal mistakes. I did a quick Google search to get into the conversation of recovering from legal mistakes.

What I found didn’t surprise me at all but might be shocking to you.

There are very few (near to none) lawyers that talk about legal mistake recovery. Most of them talk about avoiding them.

And that’s understandable because most legal mistakes aren’t fixable. Recovery from a business legal mistake can be expensive, difficult and time-consuming, and many times it’s simply impossible.

What Is The Right Attitude To Legal Mistakes

That’s why I always tell business owners that the best attitude to business legal mistakes is preemptive. This simply means taking a few steps to actually avoid business legal mistakes:

  1. Analyze your situation
  2. Consult a lawyer
  3. Make sure your business rights are protected
  4. Annual legal health check to stay up to date with legislations

Being informed and prepared is the best way to handle legal problems.

Once a mistake is made, it might be the goodwill of people you need to rely on to not totally sink. And that’s the case when you deal with partners. When your business legal mistake concerns the state or national law “I didn’t know…” doesn’t get you far.

For example, a company director has the responsibility to make sure the company is solvent while doing any kind of business. If it turns out that it is insolvent and the director was unaware of that this doesn’t excuse her from paying fines or even going to jail.

Can You Actually Recover From a Business Legal Mistake?

Sure, there are times when you can recover from a business legal mistake without much damage. But that’s not the general case.

A legal mistake doesn’t need to be a due to fraud or negligence. A simple spelling mistake can cost more than AUD 10 million.

There are a number of legal mistakes that can happen.

One of them is doing something unlawful like misrepresenting information about your product or service. The intention is not important in this case and a business will need to pay fines and remedies regardless of who or why made the mistake.

In this sense, the most important job you have is knowing the legal environment very well. Being informed about the rules and regulations that apply to your business is the basic preemptive measure businesses take to avoid legal mistakes.

The law will rarely recognize negligence as excusable. It’s your responsibility to know. That’s why many small businesses choose to consult a lawyer that will point out regulations they wouldn’t otherwise consider.

Legal mistakes are common in contract law. There are 4 types of contract legal mistakes:

  • common mistake: both parties were unaware of it and the contract may not be enforced
  • mutual mistake: both parties are mistaken about different things (the agreement might be too vague or uncertain to be enforceable)
  • unilateral mistake: one party is mistaken about an issue and if the unmistaken party is found guilty of misleading conduct, remedies might be available
  • non est factum: this is a common case where the party is unaware that it’s signing a document that creates and agreement. That’s a fixable one.

If your contract contains provisions that are unlawful (according to the Australian Competition and Consumer Commission, for example) and you have signed by mistake, this is the one that is easiest to fix. Everything else will neither be cheap, nor pretty.

What Can You Do To Protect Your Business

The businesses I work with welcome my preemptive attitude to business legal mistakes.

The best way to recover from business legal mistakes is to avoid them.

It’s as simple as that.

And what’s the best way to avoid them? Having the right amount of information. It’s good to know that what’s written is the law. If you have failed to read a contract, that’s your fault. If you have failed to get a permit, it’s your fault.

And it can cost you.

Instead, I recommend business owners to do one of two things:

  • get a lawyer that will make sure you don’t make legal mistakes. She assumes the responsibility and you can hold her accountable.
  • educate yourself by reading a book or taking a short business legal training. This is my favorite way to protect a business because it gives you enough information to even know what your lawyer is doing.


Business legal mistakes can cost millions and jail time.

That’s the harsh reality. But don’t let the consequences scare you off legal – on the contrary – knowing business law will protect you and your business.

Taking a short legal course or visiting a workshop or seminar is your best chance of avoiding legal mistakes that can cost you not only your business but your reputation.

Want to Learn More About Making Business Law Work In Your Advantage? 

And I want to give you a FREE eBook that will help you start off on the right foot with business law, save money on legal fees, avoid legal trouble and create a legally sexy business.

Want it? Get the ebook here.

If you want to take your knowledge of business law one step further to really understand business law and be able to leverage law in your business’ advantage, follow Aquarius Education on Facebook, Twitter and LinkedIn so you can be the first to hear about our upcoming Social Media Law For Business workshops.
See you there!