Is the draft of your contract sealed and legal? There have been a lot of breaches of contracts in the past year. Even though it costs money, few businesses pay for contract review services.
As a business leader, you should not make bad choices. You may have broken ground on paper, but does your contract protect your business and assets?
Contract reviews are the best way to make sure that your business gets the money you deserve to be paid. With that, it means you should have a contract review checklist to follow. Read on to learn about a plan for reviewing business contracts.
Contract Basics
When reviewing a contract, check to see if the information about the people involved is correct. Check the contract to see if the names and addresses of the parties are right. Check that the parties to the contract are listed properly, including any parent companies or subsidiaries, if any.
Make sure that the written day, month, and year are right. Check to see if the date matches the signing date on the contract. Check to see if the contract has an “execution clause” that says how the contract is to be carried out and if it follows the law.
Make sure that all the required signatures are there and are valid. Check to see if the people signing the contract are allowed to do so on behalf of the organizations they work for. If more than one person from the same party is signing, make sure that each person’s job and authority are clear.
Contract Objectives
Next on the contract review checklist is to know what your business goals, wants, and requirements are. Write down the exact goals and results you want to get from the legal contract. This will give you a standard against which you can decide if the deal meets your needs.
Check out what the contract’s introductions say about its goal and reach. Check to see if the contract makes it clear what the goals, aims, and deliverables are. Make sure that the contract’s reach is clear and covers all of your business’s needs.
Check the parts of the contract that deal with deliverables, milestones, or stages of the project. Check to see if their descriptions are clear, specific, and attainable. Check to see if these deliverables and steps are in line with your business goals and do a good job of showing the agreed-upon results.
Contract Terms and Conditions
Check to see if the terms and conditions of the deal are fair and reasonable for everyone. Think about things like business standards, how the market works, and the type of transaction. Check to see if the terms and conditions are fair to everyone involved.
Check the terms and conditions of the deal carefully for any hidden fees, charges, or penalties. Find out if there are any clauses about cancellation fees, penalties for late payments, or other financial responsibilities. Check to see if these fees and penalties are fair and sensible.
Look for clauses that might make it hard for you to do business or give you a lot of work to do, like non-compete clauses, exclusivity provisions, or confidentiality requirements. Decide if these restrictions fit with your business goals.
Legal Compliance
Find out what laws and rules apply to your business and what the deal is about. Think about local, regional, national, international, and industry-specific rules. Make a list of the most important law requirements that your contract must meet.
Compare the contract’s terms to the legal standards you’ve found. Check to see if the contract meets these requirements and does not break any rules or laws. Check to see if any required parts are missing or if any terms go against what the law says.
If you come across complicated legal provisions, terms you don’t understand, or important legal consequences, you might want to talk to a lawyer. Choose the type of lawyer that is specific to your inquiry.
For example, if you would want to ask about mergers, contact a corporate mergers and acquisitions lawyer. They can give advice on special legal requirements and check to see if the contractor is following the law.
Performance and Obligations
Read the deal to make sure you know what each party is responsible for and what they have to do. Find out what tasks, products, or services each party must do as part of the contract. Make sure that the roles are clear and that there is no room for confusion.
Check to see if the contract says enough about the tools, support, or help that each party will provide to meet their obligations. Check to see if there are plans for getting access to the facilities, equipment, material, or people needed to do the job. Check to see if the division of resources is fair and enough for the job.
Payment Terms
Check to see if the contract says the agreed-upon payment amount or how to figure it out. Check the contract to see if the pricing system, rates, or pricing mechanisms are correct. Check to see if the amount of payment is right for the goods or services.
Check the deal to see when payments are due. Make sure it says when and how often payments will be made, as well as any goals or deliverables that are tied to payments. Check to see if the payment plan makes sense for your business, taking into account cash flow and resource needs.
Intellectual Property Rights
Find out what intellectual property is important to the deal. This could include patents, brands, copyrights, trade secrets, and any other rights that belong to the owner. Find out who owns and what kind of intellectual property is in the deal.
Check to see if the contract spells out the rights to use intellectual property and how you can use them. Check to see if the contract lets you use IP the way you need to for the intended reason. Find out if there are any restrictions, limits, or conditions on how you can use the IP.
Keep This Contract Review Checklist in Mind
You must use a business contract review checklist at every step of the decision-making process. Using this checklist can help make sure a full review, improve the quality of decisions, and save time and money. Start using a contract review plan right away to improve the way you make decisions and increase your chances of success.
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