Why review a contract?
Think of it this way, a contract is the document that sets the rules of the transaction. If you have your contract reviewed prior to signing then you have the ability, quite literally, to change the goal posts so that the contract better reflects (from your perspective) what should be in it. If you only have your contract reviewed after it is signed then the rules are set, and those goal posts aren’t moving.
Before it is signed?
Most contracts that we are asked to review (75%) are prior to being signed. In other words someone is looking to sign a contract but they want a lawyer to look over it before it is signed. This is perfect as it allows us to help you make changes to the draft before you sign it.
What do you do when you review a contract?
Having reviewed thousands of contracts this is the process we follow:
- We talk to you about your motivations for looking to enter into the contract and try to find out what you have hoping to achieve by signing it;
- We read it from start to finish – sounds like a no brainer but we don’t cut corners on this process;
- We then make comments in the draft agreement (using the comment functionality in MS Word – as we find this to be the most efficient way to highlight issues or concerns.)
- We will then mark up the contract – i.e. we will alter the drafting in the contract so that it better reflects your interests (all changes made use the ‘track changes’ functionality in MS Word – we do it this way as a professional courtesy to the other side so that they can easily see what changes we have made);
- We make 2 types of comments in the draft contract:
- Comments directed to you– describing the issue, or point out something to be wary of; and
- Comments directed to the other side – where we have made a change to the contract (using track changes) we then insert a comment setting out our reasoning for requiring this change (doing it this way gives the other side a better understanding of our position which in our experience cuts down negotiation time as it reduces the number of times a draft has to go back and forth).
- We then discuss those comments that were directed to you with you, which will lead to us removing the comment and either:
- Do nothing – you will be aware of the issue and just leave it at that; or
- Amend – we will make marked up changes to the contract and then insert a comment directed to the other side about why you require the change to the clause.
- Negotiation – we can also (and generally do) assist with negotiations to finalise the contract.
- And that’s is. Sounds simple… and it is… if you know what you are doing and have done it more times than Michael Jordan has made a three pointer in the final 2 minutes of a game.
Is there any point in reviewing it once it is signed?
We are still asked, on a relatively consistent basis, to review contracts after they have been signed. In 99% of cases this is because the contract was not reviewed before it was signed and one of the parties to that contract is now having an issue.
If you are coming to us at this stage of the game we can assist because we can help you fully understand your obligations and we can then try and suggest approaches to help you in your circumstances. However what you need to understand is that once the contract is signed it can be incrementally harder to argue it in your favour if it was never drafted in your favour in the first place. We all love a challenge, but sometimes this is like trying to climb Mt Everest without oxygen or sunglasses and one leg is tied to, and dragging, a plastic canoe. Not impossible… but pretty tough.
See us early for your contract. You will be glad you did!