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;
• Non-Disclosure Agreements;
• 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:

1. You haven’t been paid and the other side is still asking for more products or services
2. 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. 

How to review a contract

The best way to review a contract is to mark it up with comments and suggested amendments using the built-in tools of word processors, such as Microsoft Word. There are also cloud based editors with more advanced security features and the ability to maintain the audit trail than Word.

Tracked changes and comments allow all parties to see the amendments suggested by both sides, colleagues and any legal professionals that have been hired to assist throughout varies stages of negotiation and revision. 

Common mistakes during contract reviews

Some common contract review mistakes include:

• Not reading the entire contract – perhaps a  clause has been dragged and dropped from older agreed contracts and these have not been reviewed by your team because they have previously been signed off by your people, maybe even an internal legal team. However, relevant legislation might have changed in the meantime, or the provisions made before might not address an emerging risk or be suitable managing the new relationship with the other party. You might also neglect to read a section of a contract if it is boilerplate, thinking ‘Oh, this is all pretty standard stuff’, this can cause you to overlook key risks, or fail to improve a generic clause to your benefit 
• Avoid complex legal language and jargon – during the review stage you might spot a term that some members of your team or your solicitor call into question. Don’t overlook terms that could cause confusion, even if you suspect the other party will  understand the language. Just because you understand a term for instance an industry acronym that doesn’t mean the other side will. Then there’s legal jargon, eliminate this where possible, so that everyone the contract relates to can understand its terms and not make mistakes based on an incomplete understanding of their rights and responsibilities 
• Align contract with expectations and goals – a vital part of the contract review stage is ensuring that the contract is achieving what it sets out to do. Is it reflecting the goals, interests and expectations of all parties? And does the contract include any clauses and terms which aren’t suitable, might be unfair, or are no longer needed? To avoid this mistake, review important clauses and T&C at each review stage confirming with the other party and your solicitor if they are needed and indeed beneficial 

Does a contract need to be reviewed by a lawyer?

Legally, no a contract does not need to be reviewed by a layer, or solicitor. But it is recommended that a contract be reviewed by a qualified member of the legal community ─ solicitor, lawyer, paralegal ─ for various reasons.

Indeed, it is considered best practice for a lawyer to review a contract and not only once. You should consider engaging a lawyer at every round of negotiations and finally before it is signed by all parties.

In simple terms you should ask a relevant legal professional to review a contract any time you want an agreement to be legally enforceable and valid.

How long does it take to review a contract?

Lawhive aims to have a solicitor assigned and actively working on your case within 24 hours. The time to complete the matter depends on a few factors such as how straightforward your case is and how fast any other parties respond. It is also worth remembering that you may ask us to review the contract at various points through its drafting, but it’s advisable that the review process is started 4-8 weeks before the planned signing.

Using Lawhive ensures you get a solicitor who knows what they’re doing and has specialist experience in your small business law.

How much does a contract review cost?

The cost for a licensed solicitor to help with contract review is dependent on many factors including the complexity and specific requirements of the case. Lawhive solicitors work for fixed fees. You'll never be billed by the hour, and you'll always know exactly how much your legal matter is going to cost you.

Fixed fee contract reviews from £189

Lawhive solicitors provide fixed fee contract reviews up to 50 pages, including a 30-minute consultation and contract review. Solicitors will report back on areas and terms of specific interest, highlight unusual or overly complex terms and advise on suggested amendments. 

To arrange a contract review, contact us today to get a free case assessment and no-obligation quote.

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