Business Contract Review
When you're creating a contract, or you're given one to sign, it's really important to make sure it covers all the area you need and protects your small business.
Even if you think your contract contains all the right information, it's still wise to check if it's fair, easy to understand, and follows the law. Signing a contract with mistakes can cause big problems later on and potentially cost a lot of money to fix.
At Lawhive, our solicitors are on hand to review your business contract quickly for a fixed fee including (but not limited to):
Sales agreements;
Enterprise service agreements;
Employment contracts;
Loan agreements;
Indemnity agreements;
Independent contractor agreements.
What is a contract review?
A contract review is the process of closely reading and reviewing the terms of an agreement.
Usually, when a contract is drafted, both parties will go over it to make sure they're happy, often with the help of a solicitor.
This process of reviewing the contract makes sure everyone is on the same page. Both sides can also suggest changes to a contract and negotiate terms before the final agreement is made.
Why do you need to review contracts?
A contract review will ensure you don’t sign up to anything that could be risky for your small business. It also will give a greater chance of making a positive impact to your business and the other parties involved.
If you fail to review a contract closely you could sign up to obligations that you can’t meet, could damage your company’s brand and reputation and waste time and resources undoing damage, ultimately having a negative impact on your bottom line.
Here some of the main benefits of a contract review:
Ensure the language and the terms are clear – this will be helpful in the case of disputes or if one side wants to take legal action against the other. Clear and up-to-date language and terms ensures the contract is understood and can be interpreted by all
Prevent misunderstandings – a review can ensure your interpretation of the contract is correct and means you don’t end up making any costly mistakes based on a false perception
Identify clauses to improve – you might identify a clause which isn’t clear or doesn’t state what you want it to legally. With a review you have the chance to clear up any ambiguity
Ensure you’re not taking on undue risk – you don’t want to take on more risk than the other party if you can help it, a contract review can determine if the risk of contract terms are within your businesses’ tolerance levels
Check terms are legal – you might uncover something that actually isn’t legal under current laws, spotting this early will give you a chance to change this before you unintentionally break the law
What does a contract review cover?
A contract review will assess the terms within the contract with a fine-tooth comb for legality, clarity of language and more which we’ll explore below.
The terms and clauses that define your contract should be where the greatest attention to detail and scrutiny are put to use.
Do they say what you want them to say in language that cannot be misinterpreted? Because if a dispute arises and you are taken to court you can be sure that the opposition will pick apart your contract line by line.
Termination clause
You’ll want to ensure that the contract gives you a route out of the agreement if things aren’t going the way you want them to.
Because when you’re drafting terms to review and sign you aren’t thinking about what could go wrong, but you’ll need to cover yourself if they other party don’t stick to the agreement, or the relationship goes sour.
There are various occasions where you might want to end a contract to protect your business:
You haven’t been paid and the other side is still asking for more products or services
The products or services have been delayed, are not up to standard or don’t meet other contract terms
Terminating a contract is usually a final resort, however you’ll want to ensure your contract terms include a termination clause that you can easily apply if the worst happens.
Review the language and formatting
Look out for any language that is unclear. Unfortunately, legal documents can be written in lengthy, old-fashioned and difficult to read ways.
Keep an eye out for anything that contradicts other terms in the contract, or that makes vague allusions to future agreements.
Are there Latin phrases or legalese contained in the contract that isn’t helpful, which could confuse someone with its meaning?
Perhaps, sentences could be shortened? Is there a need for that 6-line run on sentence? You should think about making use of short meaningful sentences. And only include one main idea per paragraph. Start a new paragraph when exploring a new idea.
Who should review contracts?
The best person to review a contract and suggest areas for amendments is a specialist solicitor, they will ensure that it is legally binding and valid.
Contract law solicitors have the experience and knowledge to review the terms and clauses within a contract and assess they’re legal and identity any risks for your business. A solicitor should review a contract at multiple stages throughout the negotiations between both parties to ensure it remains in the best interests of your business.
Of course, key members of your team should also review your contracts at each stage, bringing any concerns to a contract law specialist.