You should never sign a contract until you’ve performed a full and thorough review. However, if you are inexperienced with contracts, it can be difficult to distinguish between routine and important contractual issues. In this article, we discuss some key things to look out for when reviewing a contract.
Important Clauses and Terms
Although every clause in a contract is important, some clauses and terms are more significant than others. Although the importance of certain clauses and terms will vary by industry, you should generally pay close attention to clauses that refer to payment obligations, termination, indemnification, and dispute resolution. Importantly, keep in mind that clauses should not be read in silos; some clauses are inter-related, even if the clauses are in entirely separate sections of the contract.
Renewal and Termination Terms
Before signing a binding agreement, you should ensure that you understand the contract’s termination and renewal terms to avoid getting stuck in an agreement for longer than you originally anticipated. Therefore, when reviewing a contract, pay close attention to things like automatic renewal language and language regarding how to terminate (cancel) the contract without being in breach of the contract.
When it comes to contracts, wording is everything. Therefore, when reviewing a contract, make sure that all of the language is as precise as possible. Contract clauses that can be interpreted in more than one manner are the most common source of disputes. Parties to a contract often rely on certain contract requirements (or prohibitions) being implied–rather than explicit. A written contract should make explicit all the concepts that the parties believe to be implied.
Contract templates are common, and they can be a useful way to speed up the contract drafting process. However, a common problem with contract templates is that parties sometimes forget to complete all required spaces. Therefore, when reviewing a contract, be sure that any blank spaces you discover are either completed or removed prior to signing.
Although parties usually enter contracts with the objective of performing their required duties, things don’t always work out this way. Therefore, when reviewing a contract, make sure you understand the potential ramifications of defaulting. Also, be sure to identify the options available to you if the other party fails to perform.
Key Dates & Deadlines
Finally, it is imperative that you and your counterparty agree on (and that you subsequently monitor) all the key dates and deadlines in the contract. Confirming that these dates align with your previous oral discussions with your counterparty will help to reduce the possibility of being in breach of contract.
Contact Our New York Business Contracts and Agreements Attorney
Contracts are a key part of the business. And although it may be tempting to rely on pre-existing forms or to draft your own contracts for your business, this isn’t the best idea. Without a solid understanding of contract law, it’s easy to make mistakes—mistakes that can cost you and your business a lot of money. Therefore, it’s highly recommended that you contact a business contracts and agreements attorney for assistance with your business’s contractual needs. Please contact this firm to schedule a preliminary consultation.