A contract being legally valid does not make it workable. The purpose of a pre-signature review is to assess the document not only for compliance, but for whether it actually protects the commercial interest. The points that are hardest to change after signature are often the ones that slip past at exactly this stage.
The parties to a contract, the authority to sign and the subject matter should all be clear from the outset. Ambiguity lays the ground for differing interpretations and future disputes. Verifying the authority of the person signing on behalf of a company, in particular, prevents objections that may arise later.
What will be delivered, when and under which conditions? When these answers are not written in measurable terms, the parties can understand the same wording differently. Delivery criteria, the acceptance process and performance standards should be made concrete.
Using measurable definitions instead of vague wording makes performance easier and strengthens the position if a dispute ever arises.
The payment schedule, the consequences of delay and any security mechanisms should be set out clearly. Payment arrangements that rest on verbal agreement may build trust in a commercial relationship, but they offer no legal protection.
The limits of liability, the circumstances in which the contract ends and the route to be followed if a dispute arises should all be settled in advance. A competent court or arbitration clause can make a considerable difference in time and cost once a dispute begins.
Uncertainty around termination puts the parties into unforeseen situations. For that reason the procedure and consequences of termination should be written plainly.
It depends on the scope and complexity of the contract. Straightforward documents can be reviewed quickly, while multi-party and long-term agreements require a more thorough assessment. A document sent early allows for a healthier review.
No. Prepared documents are usually structured to protect the interests of the party that drafted them. A pre-signature review allows the document to be balanced against your own commercial interest.
This content is for general information only and does not constitute legal advice. Information requiring verification of its currency is subject to legal review.
Treating legal advice as something that only appears once a dispute has started creates a cost companies rarely see coming.
Read articleMost of the risk in a termination is created in how the process is documented and carried out.
Read articleWhen receivables are not collected on time, they turn directly into a cash flow problem.
Read articleWrite to us to talk through your needs and priorities on the topic covered in this article.