Commercial Disputes

Why should you always have a contract reviewed before you sign it?

It is surprising how frequently we see people after they sign contracts, when something goes wrong and they signed without understanding what they were agreeing to.

There are two reasons to have a contract reviewed by a lawyer before you sign

1.  To make sure that the contract says what you think it says, and does not say anything which you are not willing to agree to, and;
2. To identify clauses which the other party may be prepared to change for your benefit or protection before you sign.

There are some contracts which won’t be changed for the typical consumer, such as bank mortgages, electricity supply and internet contracts, but even in those cases if you are making a major long-term commitment it may be worthwhile to obtain advice first. However in many other situations the supplier is prepared to consider amendments to their “standard” documents. If they want your business enough they will be open to discussions about this.
Some contracts we review include very impressive graphics and other features which gives the impression that they have been prepared with care and to a professional standard, but frequently the standard of drafting in these contracts can be very low.

What can go wrong?

Don’t assume that contracts, regardless of how good they look, must be “correct” – they are sometimes flawed and signing without fully understanding can be costly. We recently reviewed a very impressive looking set of commercial documents prepared to record an agreement for IT services worth hundreds of thousands of dollars only to find on careful reading that;

• a large part of a key document, which made various claims and promises, was actually not part of the legally binding agreement at all;
• the documents in one important respect failed to say what the customer was entitled to – effectively they just said “you can have access to our app” but failed to define what the app was required to do;
• there were numerous capitalized terms which falsely gave an impression of clarity, when in fact there was no clarity because these capitalized terms were not defined anywhere in the documents.

Why was it worth having had a lawyer review the contract?

The outcome of that contract review was that the provider acknowledged that their standard documents required substantial upgrading, gave our client a four-week trial period with no obligation to continue while they undertook the upgrading, and offered to contribute towards our client’s legal fees!

But it’s a simple, standard contract….

We have also heard from our clients many times over the years “it’s a standard contract” when in fact there is no such thing. Commercial property leases being a good example. While 80 – 90% of the document may say the same things that most other leases say, it’s the 10 – 20% which are the differences which can often prove more important, but identifying what is different requires legal skill and knowledge. There is often no safe substitute for reading and understanding the entire document.
Next time you are intending to enter into a significant contract, stop and think whether you fully understand the terms, and if not whether obtaining legal advice might be a sensible step to take. We’re available to help and we’ve helped many times before.