Business Solicitors: How To Read A New Business Contract
Many companies that are on the cusp of winning a landmark deal try to rush into signing new business contracts.
Striking while the iron is hot may seem like the best course of action, but signing any contract is a bad idea if you do not fully understand all of the terms and conditions it contains.
Else recently advised a client that was about to sign a lucrative contract worth £250k per annum.
If the client had agreed to the initial draft and then subsequently failed to fulfil certain conditions of the agreement their business could have gone under.
Our team of expert business solicitors redrafted the agreement so it would protect the client’s business if anything went wrong. Here are their top tips on how to read a new business contract.
Business Solicitors Tip One: Read The Contract Thoroughly
We cannot stress this enough. When you are handed a new contract make sure you read it carefully, jotting down any queries you may have as you read.
Once you have done that, read it again making sure you check for references to the following elements and flag any query to the other party or their representatives.
Business Solicitors Tip Two: Define The Terminology
Make sure that definitions for all the major terms of the contract are clarified before the contract is signed.
Much of the difficulty surrounding commercial disputes could be avoided by clearly defining terminology within contracts so there is no room for misinterpretation.
Business Solicitors Tip Three: Pricing & Payment
When reading through a new business contract make sure it stipulates the amount you will be paid, when you will receive payment, and the method of payment.
Our commercial solicitors can help you to include useful late payment terms and debt recovery conditions to this area of your contract.
Business Solicitors Tip Four: Capping Your Liabilities
If you’re not au fait with business contracts you may unwittingly sign-up for unreasonable liabilities.
When you are reading through a proposed business contract be mindful of the responsibilities it is allocating to you.
At Else, we strive to cap our clients’ contractual liabilities and strike a reasonable balance of risk between parties.
Business Solicitors Tip Five: Terminating Your Contract
One of the most important aspects you should consider when analysing a commercial contract is how you can get out of that contract.
Whether it is by breach or for no reason at all, you need to consider the process of terminating this contract before you agree to it.
Our commercial solicitors can recommend the best termination processes to suit your business’s objectives.
Business Solicitors Tip Six: Missing Clauses
Whilst analysing a new commercial contract you should be mindful of the terms that you expect to be included in it.
If there are any missing clauses make sure that you insist that they are included or negotiate their inclusion with the other party.
Else can offer you expert guidance on business contracts and draft them in accordance with your specific objectives.
If you would like to speak to a member of our Corporate & Commercial department for no obligation advice please call 01283 526200 for advice. Alternatively, you can send us a message and we will get in touch at a time that suits you.