Contract review is an everyday part of being an entrepreneur. You read contracts every day. Sometimes, you don’t even realize you are reading (or agreeing to) a contract. Terms of Service, Proposals, Even Emails can become contracts if you aren’t careful.
Everything is negotiable. So, make sure the every contract reviewed says what you discussed before you sign it.
Some contracts don’t seem like they are that big a deal. They are short and straight to the point. You want the deal (or you need the money), so you move forward. But, if you are building a business, that may not be the best way to grow your business. Sure, you have money now. But, at what cost?
Here are some tips on how to perform a contract review before you sign it:
Compare it with What Came Before
Whether it is conversations, emails, text messages or however you communicated before the deal came through. Does it match up? Do the terms match what you discussed. A few things to consider when reviewing a contract to make sure it is, in fact, the deal you signed.
- Can you read the contract, alone, and completely understand the entire deal?
- Does any part of the agreement need a deeper explanation?
- Did the documentation with the agreement contain any explanation or anything to shed light on the document?
A tip to making sure the agreement is what you intend it to be (if you are trying to do it yourself) is to have someone who was not in the negotiations read it. Then, ask them to explain to you the terms of the deal. If they miss important points or don’t understand something, it needs to be rewritten.
Something else to look for is an “integration clause”. The agreement should state, somewhere, that it is the entire agreement between the parties. If not, those emails and phone calls and proposals may be incorporated into the agreement.
Check for Non-Negotiables
When you are reviewing your contract, you need to check for contract non-negotiables. Did you ask for something specific to be included? Is there something you need in the contract to make the deal work? Are there any deal breakers? Make sure they are there. Make sure they are clear and make sure they are not contradicted by something.
Check for Questions
During your contract review, write down any question that pops in your head. If, by the time you are done reading it, that question isn’t answered, it should be. You should not have any questions about the deal as you read. If you do, the answer needs to be provided somewhere in the contract.
Parties to the Contract
Make sure your entity is the named party. More than that, make sure that it is clear in the signature block that you are not signing individually. You do not want any personal liability coming back on you.
If you want more on what your signature block should look like, go here.
Reviewing contracts is an everyday part of running a business. Sometimes, you need to make decisions quickly. Sometimes, it would be wise to think about it (or ask for help) before you sign something. A quick rule of thumb is that if it is negotiated (meaning you had discussions about the terms before it happened) you should take your time and have someone look at it. If, however, it is a stock document (e.g. Terms of service or a cell phone contract), there is not much you can do about it. Make sure the deal is good for you, but it won’t necessarily help to have anyone look at it (unless you have questions about it).
As a business lawyer, contract review services are an essential part of my business. After all, half of what you deal with in your business is signing contracts. My process of reviewing contracts is different than some. I want to make sure you understand everything about the contract I am reviewing for you.
As you may have noticed, my contract drafting style is different than some. I have some preferences in how I like contracts to read (hint: I prefer plain english contracts). But, if a contract review shows that the contract covers the deal adequately, stylistic issues are not something worth haggling over (unless it can change the interpretation of a deal).
In all contract review services, we will look at the entire contract, but we will work on the parts that matter. The parts that protect your business. There is no place in business for lawyers to argue over whose style should be used.
With all of contract reviews, you get:
- A thorough review of the document
- A memo outlining the deal, any common issues with the type of contract reviewed.
- Suggested changes or proposed questions in writing
- One review of any revisions made based on the recommendations