Whether you’re a lawyer editing contracts or an individual who is about to sign one, you must understand the importance of a well-crafted contract. Any minor error or discrepancy can play in favor of the other party and be used against you. Vague terminology and unstated terms and conditions can cause a problem in the future.
A contract is more than just a formality. It can set the tone for the professional relationship between the parties. Here are some things to look out for and take into consideration when reviewing contracts!
Confirm important information
Contracts are rarely written from scratch. Most times, the person writing will use a template they’ve worked within the past and amend it to suit the needs of the agreement at hand. Unfortunately, humans make mistakes. It’s especially easy to make a mistake in a name, address, bank account number, or phone number. These details are absolutely crucial and can render the contract unusable if they’re not stated correctly.
Make sure to check them with extra care. Contract review software can be very helpful in doing so. The program will highlight all the important details you have to pay extra attention to, so that you don’t have to spend hours looking for them in the text. Looking for them yourself, you are bound to miss a few anyway. The software doesn’t miss.
Leave no blanks
If you’re working with a template, somebody had to amend it and fill things in. It is possible that they missed a few things and left some spaces blank. When you’re reviewing a contract, make sure that there are no blank spaces, and everything is filled in and the blanks are deleted. A blank space would create confusion and can be misinterpreted. Missing information can cause the contract to lose its power.
Check the terms and conditions
The terms and conditions are the heart and soul of the contract. There should be no inconsistencies or vague language describing the terms of the agreement. The terms and conditions should clearly state what both parties’ rights and obligations are, the payment amounts, due dates, and penalties for breaching the contract. They should also describe which actions (or inaction) constitute a breach.
This part of the contract is the biggest area for dispute. Anything that is unclear can be used against one of the parties. Terms that are not clearly defined can lead to misunderstandings. There should be absolutely no questions regarding the terms of the contract. Make sure the language used is clear and precise.
Check the termination and renewal terms
If the contract facilitated a successful professional relationship, it can be renewed upon ending. If, on the other hand, one of the parties breached the contract, it can be terminated before its end. Whatever happens, there need to be clear rules and guidelines regarding these processes. Make sure whoever wrote the contract defines the conditions under which a party can choose to terminate the contract. It should be clear which actions count as a breach and cause for untimely termination.
On the other hand, this section should also include the conditions under which the parties can choose to renew the contract. Don’t forget to mention automatic renewal if that’s something that was agreed upon. Pay special attention to this part and make sure the language is very clear and precise.
Ask someone else to review it
Reviewing contacts is no easy task. As you continue to read the same sentences over and over again, your brain goes into autopilot. You begin to lose concentration and can easily miss obvious errors. If you feel yourself getting tired, ask someone else to review the contract after you. Two pairs of eyes are better than one. They will be able to spot some mistakes that you missed. Even if you feel as though you’re on top of everything, there is no shame in getting help. Prevent silly mistakes by involving your colleagues.
Use technology
Contract review programs can be incredibly helpful in the process. AI is not prone to human error like we are, so it won’t miss things that we would. Besides, software works significantly faster than humans. What would take you an hour to go through, AI can do in seconds. At the moment, contract review programs can only suggest changes; humans still have to approve them. Nevertheless, it can save you lots of time and you remain in control of the final result.
In conclusion…
Contract review is a meticulous process. Even though it’s inevitable, it doesn’t have to take you hours. You just need to know what to look for. There’s no need to read the same thing over and over again; just look out for the most important details. Technology can be a great help in reviewing contracts, save you lots of time, and prevent errors.
