Contracts are the bread and butter of every enterprise. Reviewing them is a fundamental skill for anyone with a regular hand in business transactions.
Knowing the key elements and what to look for in any agreement can prevent misunderstandings and unpleasant legal issues that are difficult to unravel.
Understand the intention
Before diving into the details, step back and consider the goal of the contract. Determine what the document aims to accomplish. This context will help you evaluate whether the terms align with the intended purpose.
Scrutinize every word
Take the time to read the entire contract from beginning to end. Avoid skimming or skipping sections. Even tiny specifics can have powerful implications. Legal jargon is often complex, so you may need an attorney to help you understand what the contract says and its meaning.
Check for completeness
A thorough contract should cover every aspect of the agreement. Ensure that all necessary details are present, including the names and addresses of the parties, scope of work, deadlines and payment schedules.
Identify potential risks
Assess the contract for liabilities. Consider what could go wrong and how the contract addresses these scenarios. Look out for indemnity clauses, limitation of liability clauses and dispute resolution mechanisms.
Verify legal compliance
Every contract must comply with relevant laws and regulations to avoid legal complications. It must also be free of illegal or unenforceable terms.
Protect yourself and your organization by carefully examining all business contracts. Doing otherwise is an oversight you are bound to regret.
