Here are some of the basic areas that every contract lawyer will look at when considering any contract:
- Get the parties right
This is a very common mistake.
- Consider who is entering into the contract and, with legal persons like companies and LLPs, make sure you have the right names, registered numbers, contact details etc.
- Generally, although reforms are due, only the parties to a contract can enforce the contract.
- Make sure the parties have the capacity to contract
Again, getting this wrong can be fatal.
- Think about whether or not the other party you are dealing with has the legal capacity and the authority to deal on the level you need.
- Certain companies only allow directors, or specified signatories to sign off on contracts above a certain level.
- When selling products which will form part of a consumer’s home (e.g. a bespoke kitchen), make sure the property owners are parties and sign up. Remember, in law, a husband is not his wife’s agent (or vice versa).
- Make sure what has been agreed is in the contract
Not doing so is perhaps the biggest cause of disputes.
- Put simply, the contract needs to deal with the agreement between both parties.
- Remember too, not all agreements are regarded in law as binding contracts.
- This sounds obvious but, when negotiating, get all the awkward issues on the table then agree and record the detail. Later, parties can discover they had not, after all, reached a binding agreement at all.
- Price is rarely everything – you must also think about who is bearing the risk if things go wrong.
- Do not assume silence means the other party has agreed with you.
- Get the contract to cover what you need but bear in mind it is only as good as the asset or covenant strength of the legal or natural person you are contracting with. If that covenant is not enough, think about getting some form of security.
- Is there anything which is not in the contract, that affects this contract?
Double check the contract can do what you want it to do.
- Do not assume any draft or set of terms from the other party are the end of the story. They may have deliberately omitted certain terms because the law favours their position if they stay silent.
- Consider if the agreement is Business to Consumer (B2C), Business to Business (B2B) or both. If B2C, there are many statutory rules which regulate the contract, regardless of its terms. Even with B2B there are statutory limiters on exclusion and limitation provisions.
- Are there any standard form terms and conditions, industry or trade association rules, guidelines, or legislation which affect the contract? You may need to refer to these then expressly dis-apply them, or some part of them.
- Who/what else is needed to make the contract work? Sometimes, this can be easy-the other party binds their sub-contractors or suppliers with your terms. Often, however, the acts or omissions of third parties, over whom neither side have legal control, need to be addressed and the risk allocated.
- Read the draft carefully
Then read it again.
- Make sure you read the whole draft, not just the parts which have been fought over (perhaps for many months or even years).
- Some typing or printing errors can be catastrophic, for example the difference between a “not” and a “now” can make all the difference because that single letter typo changes a prohibition into a permission.
This is only a snapshot of what needs to be looked at in relation to commercial contracts, and every contract will need to be considered alongside your business and its own circumstances. Our team has years of experience in negotiating, drafting, revising and enforcing various forms of contract. Everyone likes lists so here is a non-exhaustive one of the areas we cover: standard form contracts; bespoke terms and conditions; master service agreements; framework agreements; outsourcing agreements; short term and long term supply agreements; research and development agreements, collaboration agreements; consultancy agreements, distribution agreement, reseller agreements, agency agreements; procurement / commercial tendering matters; B2B; B2C; heads of terms, non-disclosure agreements, confidentiality agreements; privacy policies, mobile app development agreements, user terms, online terms and conditions, website terms and conditions, software development, software as a service, systems integration agreements, hardware maintenance and other areas in IT and technology.
If you have a contract you would like to be reviewed or another query in relation to this area, please get in touch with Emma Arcari or Stephen Cotton at 0845 22 33 001.