Before you sign on the dotted line…
Posted 2 years ago by aequitaslegal in Commercial Contracts
At the heart of most business transactions is a contract. A necessary document to ensure the balance of protection against facilitating business.
Whilst we all hope for a positive trading relationship, unfortunately this is not always the case. Commercial disputes can drain significant time and costs from your business. Therefore, it is essential to ensure the terms and conditions in place are robust enough to deal with a “what if” scenario.
Here are our top 5 tips to consider before you sign up on the dotted line.
- Whilst the first would seem too obvious to list, you would be surprised how many times this is filled incorrectly. Ensure that the correct parties names entered, along with the registered office details. In a market where it is common to see groups companies, holding companies and trading as, it is easier than people would suspect for this being done incorrectly. However, the implications are significant. If an incorrect party is referenced as the contracting party, this could limit the recourse you have if anything was to go wrong.
- The next element is the service scope, ensure the parties are capturing the job to be performed. Having a generic service/ goods scope will create ambiguity if there is any misunderstanding.
- During a business relationship, the parties are likely to exchange information which is integral and invaluable to the structure of their business. Therefore, any agreement should contain mutual provisions to ensure all parties keep this information strictly confidential, during and after the performance of the contract.
- Whether you are the paying or receiving parties of monies, it is crucial to ensure the payment provisions and clear and concise, detailing exactly when payment is due and the implication if not.
- Financial exposure – whilst we hope it never occurs, if your business was to breach the contract, ensure you are clear on what your financial exposure is and they you have sufficient cover in order to address this if needed?
If you are about to engage in a commercial contract and would like a second opinion, feel free to give Aequitas Legal a call on 0161 358 0800.
In the alternative, as business with growing legal demands, you may want to consider drafting a standard set of commercial terms to use in all future transactions. We can support you with this. Feel free to call us on 0161 358 0800