What to Look for in a Contract
on May 31, 2014on May 31, 2014
The contract is the fundamental document in most business transactions. The contract is usually a multi-page document that has paragraphs that seem to address everything from the contract price, to performance under the contract, to even the strangest potential issues the parties foresee when signing the contract. However, few business owners have ever taken the time to read and understand the important terms in their contracts. Many businesses have simply taken contracts from other companies or competitors and have no idea what the contract actually means.
It is important, however, for the contract to actually be read and understood by each party. The attorneys at Slater, Tenaglia, Fritz & Hunt have spent years mastering the art of contracts. In developing this mastery, however, they have seen contract language that (1) conflicts other terms in the contract, (2) materially changes the intent of the parties, or (3) is illegal or unenforceable. As a result, we have prepared the following contract checklist to help businesses review and understand any contract. This checklist is not a substitute for competent legal counsel. Instead, it is a guidance document to facilitate a discussion about the contract with a contract attorney.
First, the contract should identify who is entering into the contract. Specifically, it should name both the businesses involved and the parties signing on behalf of the businesses. Next, does the contract have a clear provision identifying the roles of the parties? In other words, when does one party provide the service or good and when does the other party pay for those services or goods?
Is the contract as specific as possible regarding all materials, services, or goods? The last thing you want to do is agree to produce 1,000 five-inch widgets when the buyer wants 1,005 one-inch widgets.
Does the contract include everything the parties have agreed to? There should be no “side agreements,” warranties, or other promises unless they are in writing and incorporated into the contract.
Can the contract be updated? Even after signing the contract, the parties may want to make some changes. If you have added or subtracted services or goods, substituted materials or equipment, or changed the due date, the written contract should be modified. The contract should have a method of making those modifications.
Our attorneys can help you interpret your standard form contract, develop a new standard form contract, or address breached of your contract.