Don’t Get Caught Out by Contracts

Dealing with contracts is part of day to day life in the world of business: employment contracts, rental agreements for your premises, and assuring your supply of raw materials or stock. It’s important to be informed about how to write a good contract, and how to negotiate so you don’t get trapped in a bad one.

Many people overlook the precise wording in contracts, assuming that everything covered in their negotiations will be transferred into it perfectly. This is a rash mistake: if you rely on something agreed informally before signing the contract and try to rely on it later but find it wasn’t included in the document you signed, you may find yourself in trouble, unable to enforce the terms you need. Even the best intentioned person may make a mistake and fail to include an important condition. Less well intentioned people may rely on you failing to read a contract properly and provide a less than accurate account of your agreement.

One important way to make sure your contract describes what you need it to, whether you’re drafting it or signing it, is to give it to someone who wasn’t involved in the negotiations. They don’t have to be an expert in contract law (though if you have the resources, submitting it for a proper contract review by a lawyer is the best way to be safe), just someone you trust with some understanding of business. Once they’ve read the contract, ask them to summarise its main points to you. If their summary, derived from the contract alone, matches what you think you’ve negotiated, it’s a good sign that the agreement you negotiated has made it into the contract safely.

If you’re the one drafting the contract, it’s best to keep it simple. Contracts do not have to be written in obscure, antiquated legalese: confusing language in contracts is mostly there due to custom and tradition rather than any legal need. Trying to imitate it in order to make your contract appear more formal will likely end with you tying yourself in knots, and potentially giving away more concessions than you really want to. The best policy is to clearly state, with as little ambiguity as possible, what the service you are paying for is, how much you will pay and what penalties there are for late delivery, poor performance or quality, as relevant.

This sets you up to be sure the contracts you’re writing and signing get you what you want, when you want it with no nasty surprises down the line.

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