It’s a fact of life: Contracts are everywhere. Whether you are signing a new lease agreement or whether you hit the “I accept” button on the terms and conditions for your new software, contracts are needed to document the agreements made and to benefit all of the parties involved. Perhaps due to the fact that they are a constant presence in our lives, we tend to glance over a contract and just sign it without really knowing what it obligates us or the other party to do. Therefore, it is important to know what to look for when reading and reviewing any contract.
Here are a few suggestions for reviewing your contracts. Of course, this list is not exhaustive, and an attorney will be able to give better advice on the ins and outs of your particular contract:
1. Identify the parties: Use complete names and ensure that the parties’ names are written correctly. Include any fictitious/trade names and the names and addresses of any subsidiaries that will receive benefits from or be obligated to perform pursuant to the contract.
2. Terms of the agreement: Make sure to capture who is responsible for what. Also, review all of the common terms within the contract in order to understand what they mean. These are usually phrases such as, “heretofore known as,” or “shall mean.” While reviewing the terms, ask for what you want. You never know what you can get. The worst that can happen is that you get a no.
3. Make sure to leave nothing blank: Items that are left blank have the possibility of being filled in by someone else. Needless to say, this may not be good for you.
4. Risk allocation: Detail how any risks will be allocated. Risk is typically borne by the party in the best position to prevent loss.
5. Remedies provision: It’s imperative to limit your liability. Determining what types of remedies you need in event of default by the other party is crucial.
6. Deadlines and important dates: Set a reminder on your phone or put any dates on your calendar so you don’t forget about any responsibilities that you may have.
7. Dispute resolution: Determine how you would like to deal with the resolution of disputes. There are options such as mediation or arbitration which may be more time and cost efficient than litigation.
8. Indemnification: When you indemnify someone, you agree to protect them from liability resulting from the transaction. Many contracts include indemnification clauses, so be on the lookout for them!
9. Renewal terms: At times, contracts contain automatic renewals. Deciphering whether or not they exist within the document, and whether you want them or not is key.
10. Contract termination: Look for under what terms and circumstances your agreement with the other party may end. Think of ways to terminate the contract if it is not working to your benefit.
11. Keep a copy of your contract: This tip seems like a no-brainer, but people often forget to retain a signed copy of their contract for their records.
Remember, when someone asks you to sign your name, they are essentially asking you to bind yourself to the conditions set out within that document. You should never feel bad about reviewing your contract. Almost anything you sign can be enforced in court as a contract. Your signature is the indication that you read and understood what you were signing.
Remember that a contract reviewed by a qualified attorney is less expensive than bringing or defending a breach of contract lawsuit.
If you need any contract reviewed or would like legal advice in the creation of a contract, contact us at the Kendrick Law Group. Many of our contract preparation and review services can be performed on a flat-fee basis. Feel free to reach out to us at 407-641-5847 or info@KendrickLawGroup.com.