Contracts form part of our everyday lives, whether used in a personal capacity or for business. For example, in a personal capacity, you may need to review a contract when signing up with a network or cell phone provider; while for work, you may be involved with employment contracts, non-disclosure agreements or lease agreements. Whatever the circumstance may be, it is worth knowing your way around reviewing a contract to ensure both parties are aware of each other’s rights, roles, and responsibilities prior to entering the written agreement.
When reviewing a contract, it is useful to know what the most important areas are to focus on and, if you discover any errors, discrepancies, or blanks, or find that the contract is unclear or ambiguous, you should not proceed until all issues have been resolved. Here are some of the key things to look for when reviewing a contract:
- Both parties must be identified – Check the details are documented correctly including ACN and ABN as required.
- Term of the contract must be clearly defined – Is the contract for a fixed term and does either or both of the parties have an option to extend the term. If so, what is the notice period or requirements before a term will be extended.
- Understand the termination/ renewal clauses – Ensure that the termination and renewal terms are clear and keep a look out for an automatic renewal clause which automatically renews the contract for another term unless notice is provided to terminate the contract prior to the expiry of the initial term.
- Dispute resolution should be clear – The contract should specify the dispute resolution process and if so, is it suitable for the type of contract?
- Any financial obligations should be clear – what is being paid and when, what are the default interest / default cost implications for late payments, are prices inclusive of super, GST or other taxes?
Finally, when reviewing the contract ensure that there are no errors in the administration, namely:
- Ensure there are no blanks in the document
- Review the definitions carefully and check that all defined terms are used correctly.
- Check that all details such as names, places, dates, and amounts are set out correctly.
- Check that there are no formatting errors. A misplaced comma can be costly!
Essentially, when reviewing a contract, it is important that the information is stated clearly and accurately, is free of errors, discrepancies or potential conflicts and has acceptable terms to prevent both parties from getting locked into an unsatisfactory agreement. If you are not entirely confident that you understand a contract presented to you, it is worthwhile consulting a lawyer before signing.
At D’Angelo Legal, our Commercial Lawyers review contracts in plain English, assisting you in understanding what you are signing, negotiating changes where necessary, ensuring your contract is as fair as possible and addresses all your concerns with the respective transaction.
For further assistance with reviewing a contract, Start the Conversation by contacting our Commercial Lawyers through our website or by calling (08)93811147. D’Angelo Legal, the Trusted Name in Law.