How To Work Out Quickly Whether You Should Sign A Contract?


How can you work out in 15 seconds or less whether you should sign that contract? Interesting. Stick around and I’ll tell you how to work out quickly whether you should sign a contract.

Hi everyone, Simon here from The Contract Company. We also run another website called  If you’ve got any questions, just go to, fill in the form, and we’ll make a video answer like this just for you.

How  to work out quickly whether you should sign that contract

Easy, you need to look for the clause that’s going to cause you the most pain. What is that clause?

It’s the indemnity clause.

The Indemnity Clause

So do a search for indemnity or indemnification, see what comes up, and then read the terms of that clause. An indemnity is where you promise to cover the other party’s loss.

So if you cause them any sort of loss, the indemnification clause will basically say, “You have to make good on that loss that you caused them.”

Now those clauses can be drafted really broadly to include not only their loss. They can include any loss they suffer from engaging third parties, like lawyers, and so you want to look for that clause first.

So what I’m trying to do here is trying to give you the key pain point or the key clause that’s going to cause you pain and it’s the indemnity clause, right?

So if there is no indemnity clause, beautiful, sign up. Obviously, I’m being a bit flippant because you need to check everything, but I’m trying to give you in a cascading sort of order the most important clause.

And if you’re providing services, it’s the indemnity clause, right? Obviously, you need to check payment terms, payment amounts, make sure that’s right. But that is the key clause to look for if you’re going to sign that agreement.

Leverage of an Agreement

What do you do then if you have to sign the agreement because you’ve got no leverage, and let’s face it, in 99% of contract negotiations, one party has more leverage than the other.

So what do you do if you have to sign it because you don’t really have any alternatives? Fine, sign it.

But then what you need to do is maintain the relationship with the other side to such a degree that if any issues ever arise, they don’t look at the contract but actually come to you to try and work them out.

So how do you do that?

By being personable, by always picking up the phone and just touching base, by trying to build rapport, that sort of things. Just by being a decent person, to be honest.

But a lot of people don’t do that, and so when things do go pear-shaped, what happens?

Out comes the contract out of the drawer and they start looking for ways to slap you.

Now, I did another video on this recently that had some more information in it, but basically that’s what you want to do. If you have to sign that contract, make sure you maintain the relationship. And that is how to work out quickly whether you should sign a contract.

And that way if things do go pear-shaped, instead of them relying on the indemnity clause to come and get you, they’ll actually pick up the phone and have a chat and try and work it out that way. At least that’s what we see anyway.

Hope that helps. Any questions, feel free to get in touch, or 1-800 355 455. Thanks very much.

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