Reading time: 3 minutes

Businesses regularly enter into contracts for various goods and services. Written agreements set out the parties’ expectations as well as their rights and obligations. In reality, many SMEs have limited resources and turn to drafting their own legal documents. As many business disputes emanate from poorly drafted contracts, we recommend a lawyer review your business’ agreements. Below, we set out some quick tips on what to look for when reviewing a commercial contract. 

contract-review-checklist

1. Is the Contract in Writing?

Verbal agreements can legally bind parties, but they are often difficult to enforce. You can avoid the headache and costs that come with litigating a contractual dispute by writing down all key terms. A lawyer can assist you in determining whether the contract contains all the terms parties agreed to during the negotiation phase.

2. Is the Contract Expressed in Simple English?

Avoid using archaic terminology and convoluted sentences. Outdated legalese such as ‘inter alia’, ‘aforementioned’, ‘hereinabove’ should be left where it belongs – in the past. A well-drafted contract should use short, clear, simple sentences. 

3. Are You Contracting With the Correct Party?

Although this seems straightforward, a surprising number of parties get this wrong. We have reviewed agreements where a party had incorrectly identified their own company. Ask yourself: 

  • Does the person I am negotiating with have the power to make a decision? 
  • Is this person the right entity (i.e. a company vs. private individual)?

Trying to hold a company accountable for a failed business venture is of little use if you entered into a personal agreement with the CEO.

4. Are the Details Correct?

It is important that a contract spells out all the details of the parties’ arrangement, such as: 

  • performance obligations, 
  • payment terms, 
  • right of termination, 
  • dispute resolution (including any alternative dispute resolution), and
  • remedies in the event of a breach. 

Jurisdiction is particularly important when contracting with an individual or company based interstate or overseas.

5. Is There a Confidentiality Clause?

When a party enters into a contract with another business or individual, they will inevitably disclose and/or exchange confidential information. Unless there are special circumstances, it’s sensible to impose ‘mutual obligations of confidence’. In doing so, parties can ensure that any information they disclose throughout the course of the relationship is not shared with third parties or used for ulterior purposes.

6. Have the Parties Correctly Executed the Contract?

A contract is executed (i.e. effective) when a person with the authority to sign the agreement does so. If an individual is the contracting party, the person with the authority is the individual. If the contracting party is a company, the person is either a director or agent with express authority to sign on behalf of the company.

7. Have You Read Through the Document for Errors?

Importantly, parties should ensure all cross-referencing is correct. Incorrectly cross-referenced paragraphs can give rise to ambiguity, and potentially, make the clause unenforceable. Also, proofread the final agreement to ensure it is free of errors. A small typo in a crucial clause (e.g. a missing comma) can be detrimental.

Key Takeaways

Make sure that your agreement withstands the scrutiny of the other party and, if necessary, the courts. It’s prudent to have a lawyer review and if required, redraft your contract. This manages your business’ risk and prevents issues escalating into expensive legal disputes. If you have any questions or need assistance drafting an agreement, get in touch with our contract lawyers on 1300 544 755.

Webinars

Redundancies and Restructuring: Understanding Your Employer Obligations

Thursday 7 July | 11:00 - 11:45am

Online
If you plan on making a role redundant, it is crucial that you understand your employer obligations. Our free webinar will explain.
Register Now

How to Sponsor Foreign Workers For Your Tech Business

Wednesday 13 July | 11:00 - 11:45am

Online
Need web3 talent for your tech business? Consider sponsoring workers from overseas. Join our free webinar to learn more.
Register Now

Advertising 101: Social Media, Influencers and the Law

Thursday 21 July | 11:00 - 11:45am

Online
Learn how to promote your business on social media without breaking the law. Register for our free webinar today.
Register Now

Structuring for Certainty in Uncertain Times

Tuesday 26 July | 12:00 - 12:45pm

Online
Learn how to structure to weather storm and ensure you can take advantage of the “green shoots” opportunities arising on the other side of a recession.
Register Now

Playing for the Prize: How to Run Trade Promotions

Thursday 28 July | 11:00 - 11:45am

Online
Running a promotion with a prize? Your business has specific trade promotion obligations. Join our free webinar to learn more.
Register Now

Web3 Essentials: Understanding SAFT Agreements

Tuesday 2 August | 11:00 - 11:45am

Online
Learn how SAFT Agreements can help your Web3 business when raising capital. Register today for our free webinar.
Register Now

Understanding Your Annual Franchise Update Obligations

Wednesday 3 August | 11:00 - 11:45am

Online
Franchisors must meet annual reporting obligations each October. Understand your legal requirements by registering for our free webinar today.
Register Now

Legal Essentials for Product Manufacturers

Thursday 11 August | 11:00 - 11:45am

Online
As a product manufacturer, do you know your legal obligations if there is a product recall? Join our free webinar to learn more.
Register Now

About LegalVision: LegalVision is a commercial law firm that provides businesses with affordable and ongoing legal assistance through our industry-first membership.

By becoming a member, you'll have an experienced legal team ready to answer your questions, draft and review your contracts, and resolve your disputes. All the legal assistance your business needs, for a low monthly fee.

Learn more about our membership

Need Legal Help? Submit an Enquiry

If you would like to get in touch with our team and learn more about how our membership can help your business, fill out the form below.

Our Awards

  • 2020 Innovation Award 2020 Excellence in Technology & Innovation Finalist – Australasian Law Awards
  • 2020 Employer of Choice Award 2020 Employer of Choice Winner – Australasian Lawyer
  • 2020 Financial Times Award 2021 Fastest Growing Law Firm - Financial Times APAC 500
  • 2020 AFR Fast 100 List - Australian Financial Review
  • 2021 Law Firm of the Year Award 2021 Law Firm of the Year - Australasian Law Awards
  • 2022 Law Firm of the Year Winner 2022 Law Firm of the Year - Australasian Law Awards