Introduction
The execution phase is often an exciting time of the contract administration process. It might mean that you are close to commencing the works relevant to the contract. In any case, you may be tempted to go ahead and sign the contract as quickly as possible. However, you must take time to properly review the “ready for execution” version of the contract before jumping in and signing. In this article, we will discuss reviewing the for execution version of the contract.
Check the Party Contact Details
It might seem obvious, but checking each party’s entity details before signing is important. Review your details and those of the other party entering into the contract to make sure the entity name, ACN, ABN, contact person, address, contact phone number and email are correct. If you need to issue a notice for a breach of contract or termination notice following execution, you must have the correct details to make such contact.
Similarly, both parties must properly sign the contract. If they do not, you may not be able to enforce the contract at a later date.
Continue reading this article below the formKnow the Price
To stay afloat, you should budget accordingly. You should therefore ensure that you have obtained verbal confirmation from your counterparty about the key terms, including the price. These terms should be to your commercial advantage.
This, in turn, ensures you know when you are able to issue a payment claim to ensure prompt payment. You should also know when to expect to receive payment (or any payment schedule disputing the payment claim). This is particularly important for big or longer-term contracts. You want to make sure that you are handling any disagreements in relation to fees at the time rather than issues compounding and resulting in underpayment and/or a dispute.
You should also know when — and for what reasons — you might be able to increase or otherwise modify the price. This, in turn, may require you to undertake specific notices and processes.
Understand Each Party’s Obligations
The contract should set out the scope of work you are providing and your obligations. You should not be expected to provide any incidental, related or secondary services. Make sure that the other party has not included any extra commitments that you have not agreed to when negotiating the contract.
The contract should also place certain obligations on the other party to allow for you to provide the work properly. For example, you must have sufficient site access and time to carry out the work. Be sure to check that there is a mechanism in place to allow you to claim extensions of time and funds to be able to cover an interruption to the works, which is out of your reasonable control.
Be Conscious of the Termination Provisions
Can either party terminate the contract for any reason? Or can the parties only terminate the contract for a breach? When reviewing your contract, you should confirm under which circumstances you or the other party can terminate the contract.
Where you are carrying out the works, ideally, the other party can only terminate the contract for breach of contract. However, if you agree to a termination for convenience right, you should check to ensure the other party has given you sufficient notice ahead of the termination.
Situations may arise which cause you to breach the contract. You should ensure that you have ample time and capacity to fix any breaches before the contract can be terminated.
Finally, following any contract termination, you must know your obligations to the other side (and vice versa).
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Key Takeaways
It is vital that you have read and understood your obligations, and those of the other side, under the for execution version of the contract. Ensure you know the following:
- how to submit a payment claim;
- when to expect any payment schedule;
- how and for what reasons you might be able to terminate the contract; and
- what you might be liable for.
If you have any questions about drafting, reviewing or negotiating a contract, our experienced contract lawyers can help you. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Contact us on 1300 544 755 or visit our membership page.
Frequently Asked Questions
Above all, you should ensure you understand all the terms and that they are commercially advantageous. There are also certain formalities, such as properly signing the contract to ensure it is enforceable.
If a contract is not properly executed, such as when both parties have not properly signed it, it may not be enforceable. However, this is not always the case.
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