When you sign a contract, you want it to reflect everything you and the other party agreed upon. If it does not, you may not receive the benefits you expected, and your business and its bottom line may suffer as a result. Because of this, a thorough contract review is a crucial step in any business agreement.
What details should businesses look for when reviewing contracts?
Contract review often depends on the details, and subtle differences in the wording of a contract could make a big difference after you have signed it. Some of the elements to examine closely when reviewing a contract include:
- The parties—Ensure that the contract correctly identifies your company and other parties involved. You should also confirm that the signature lines refer to people with the legal authority to sign on behalf of the companies involved.
- Termination clauses—While you may not intend to terminate the contract, it is still essential to include the procedure for terminating a contract and acceptable causes for termination if applicable.
- Rights and responsibilities—While an oral agreement may be the groundwork for your contract, it is essential that the contract you sign reflects that understanding. Neglecting details in this portion of the contract could leave your company responsible for unexpected responsibilities or without recourse if the other party falls short of what they initially promised.
- Incorporated documents—If the contract references another document, be sure to review that document as thoroughly as you do the contract itself.
- Dispute resolution—If disagreements arise in the future, you want to have a clear path to dispute resolution. Depending on your goals, your contract might include a requirement for mediation or arbitration to keep disputes out of court, for example.
While reviewing these details and others can help you gain greater confidence in the contract you sign, it may also be important to work with an experienced attorney throughout contract review and negotiation. As Forbes notes, a thorough examination of a contract’s language with legal guidance can help prevent future conflict and help you negotiate a contract that reflects your business and its goals for the future.