A contract review necessitates patience and attention to detail. Managing expectations, concentrating on outcomes, and obtaining critical information from suppliers may all aid in contract management success.
We'll describe the procedure and give a more detailed description of what contract reviewing entails in this post.
What is a Contract Review?
The practice of properly reading and comprehending a contract before agreeing to its terms is known as contract review. It may be done manually or with the help of contract automation tools.
The document will be scrutinised during contract review to ensure that it contains all of the elements of a contract, that everything is stated clearly and accurately, that there are no errors or discrepancies, that there are no potential conflicts, and, most importantly, that the terms are acceptable so that the parties are not trapped in an unsatisfactory agreement.
Despite the fact that contract review requires time and money, it is often less expensive than defending a breach of contract action.
Why is this process important for my business?
When you're asked to sign a contract, you're agreeing to legally bind yourself or your business to the terms of the agreement.
Contract review is an important element of any contracting process since it decreases total risk, enhances the likelihood that all contract parties will profit, and allows both parties to completely grasp what they are committing to before signing anything.
Who can review my contracts?
Depending on the stakeholders engaged in the contract, the contract review process may involve numerous persons.
Before signing the contract, the parties have one final chance to detect and seek revisions. Following the signing, it's a matter of obligation management, with parties attempting to anticipate certain contracting events such as for re-negotiation or opt-out windows in order to prevent being caught off guard by future crucial dates and deadlines.
The function of each reviewer determines how a contract is examined. The counterparty will read the contract line by line, accepting some changes and recommending others while considering a solution acceptable to both parties.
Typically, they'll send it back with revisions. The drafting party, on the other hand, will simply need to evaluate what was altered or rejected.
What are the most common mistakes during this process?
During the contracting process, many businesses commit a variety of errors, including:
- Filling out a contract template incorrectly;
- Signing a contract without first reading it;
- Assume that a contract is non-negotiable and must be signed in its entirety;
- Believing that ‘standard language’ does not require re-evaluation;
- Signing a contract that is unclear or difficult to understand;
- Pushing back unnecessarily on insignificant terms;
- Making any of these errors can lead to a party signing a contract that isn't in their best interests, or worse, a contract that isn't signed at all.
It is fairly unusual for ordinarily cautious people to scan a contract and sign it without fully understanding what the contract requires of them or the other party. Before signing any deal, consult with one of our contract lawyers to ensure that your interests are protected.
What should I look for in a contract?
Here are a few components you should look out for during the reviewing process:
Make an agreement on the terms
When you're presented with a contract, keep in mind that it's just the beginning. Almost every deal has provisions that can be negotiated.
Understand the contract's purpose and scope, and then ask for what you want. You want the agreement to go through, but so does the other party.
Determine who the parties are
Include any subsidiaries that will supply services, as well as their names and addresses.
Fill in all of the blanks
Items that are left blank can be filled in by someone else later, so make sure you fill them in. On any preprinted forms, it's also a good idea to initial all modifications or deletions.
Obligations and rights
It's critical to document who is accountable for what and who is liable if things don't go as planned. Never rely on a verbal agreement.
Understand your rights and duties. Read the whole contract carefully because rights and duties are usually dispersed throughout.
Provisions for confidentiality
If the other party will have access to any of your nonpublic personal or protected health information, include a clause requiring them to manage and safeguard it in a commercially reasonable manner in accordance with relevant federal and state regulations.
Handling disputes
Determine how you wish to handle conflict resolution. A need for arbitration or mediation might save you a lot of time and money in the long run.
However, there are situations when you'll need to go to court to settle a disagreement.
These are only a few of the components that any business should consider, and there are many more that are critical to the success of how you run your company. Contract review may be a time-consuming procedure, but with our assistance, we can simplify the process.
Persona Finance aims to provide better value for all businesses by offering contract drafting and review services. Our contract experts are dedicated to controlling and minimising the risk that your business may face. For more information on how we can help your business, please contact us at [enquiries@personafinance.co.uk].
