Are you sure you want to sign that?
Entering into any type of contract can be a tricky process, and businesses that fail to fully check all details can find themselves in hot water, facing considerable legal implications if a deal ends up being far from what they expected.
Outlined below are ten things you need to know before entering into a contract, in order to protect your company and assets.
1. Ensure you know the other party
Yes, you may have met the other business in an initial meeting, but ensure you know how they operate, where they operate and any other important information about them before entering into the contract.
Should there be any issues further down the line, it will be easier to state your case if you have this type of information handy.
2. Be clear on the product/service
This may seem like a fairly obvious consideration, but we have seen countless legal cases around this issue. So, ensure you and the other party are on the same page when it comes to exactly what you are providing or receiving under the terms of this legal document.
3. Issues with pricing
If you are a buyer or seller, know what you are paying or getting paid. Also, ensure you are familiar with when the money is due, the method it is going to be paid by, and where it is being paid to.
4. Know when delivery is due
You should always specify the exact time frames for the delivery of each product or service you are providing, as well as when payment is due in relation to this time frame.
5. Know warranty information
Do you know the guarantees on each product or service? Ensure you are clear on this information, along with the period that they cover. In order to prevent any mistakes, ensure you know the procedure for repairing or replacing an item or correcting a service mistake.
6. Be clear on expected standards
Are the items new or used? If the latter, what condition are they in? In cases where the product is new, check whether they are in the original packaging, or have been repackaged. If you are entering into a service contract, it is best to be sure about who will be carrying out the service, along with their credentials.
7. Is there a way out of the contract?
In some instances, you may want to negotiate an “out” clause in a contract for poor performance, or lack of proper delivery. Most contracts are made to avoid getting out of, but in some cases this is necessary.
8. What about renewal?
Check whether there is automatic renewal. Or, if there is any option to renew.
9. Consider default
It is possible to default on a contract in several ways. The most common methods include non-payment, which includes not getting paid in full, on time or at all, and non-performance, which can be cited when the other party has failed to carry out the job properly, in full or as you expected.
It is best to ensure the contract has a section that is dedicated to remedies for defaults. This term is given to compensation of an injured party for such defaults.
Contact Percy Hughes & Roberts
Before signing a contract, you may want to speak to a legal expert about your circumstances. At Percy Hughes & Roberts, we have a great deal of experience in dealing with clients from a variety of industries who are in the process of drawing up contracts, so our team is happy to help.