How to Review a Contract
Business owners have to sign so many agreements it can be tempting to merely skim over the document and click the box or sign on the line. You might assume that most contracts have standard language, but you might be surprised at the terms people try to sneak into seemingly innocent sections of business contracts.
When your assets or rights, like intellectual property rights, are at stake, you should talk with a Maryland business contracts attorney before signing an agreement. Your lawyer can provide additional guidance, review, and negotiation for your Maryland business, but here are a few tips on how to review a contract:
Many contracts contain negotiable terms. You might not have to accept the document as written when the other side sends it to you. They hope you will merely sign the paper, but people usually allow themselves some “wiggle room” on the initial draft of a contract.
Make sure there are no surprises about the parties to the contract. If you do not recognize an individual or organization listed as a party, you can ask for clarification. You do not want to discover later that the entity you dealt with was a shell corporation.
All the terms of the agreement must be in the contract. If the document is missing any essential term, like the price, quantity, or time for performance, do not sign it. Also, any promises the other side made to you do not exist in the eyes of the law unless you memorialize them in writing in the contract. If the other side refuses to put their promises in the contract, they probably do not intend to keep their word.
All the rights and responsibilities of all the parties should be clear and unambiguous. You cannot enforce a duty or benefit if the contract does not mention it or could get interpreted in multiple ways.
The contract should state what will happen if things go wrong. The agreement should say who will bear the risk and loss in which situations, and details about any required insurance or bonds. The contract should also specify the remedies available to each party, like daily liquidated damages at a specified rate per day for completion delays. The remedies section should state whether the parties will try to resolve their differences through arbitration or can go straight to court.
Do not sign a contract that contains blanks. Doing so is like signing a blank check.
Initial changes. If you make any changes to a form contract, write your initials and the date next to each edit.
Understand how to terminate the contract. Sometimes you need to get out of a contract. The document should include information on how to terminate the agreement, the allowable grounds for termination, and the consequences if a party ends the contract.
Ensure confidentiality. When the work involves the other party getting access to your files or other information, include a confidentiality requirement in the agreement.
Do not sign a contract that incorporates the terms of another document you do not have. You will want to get a copy of the incorporated document and read it with the same level of scrutiny as the main agreement.
These are but a few examples of things you should consider when you evaluate a contract. A Maryland business contracts attorney can review your contracts, negotiate on your behalf, and draft changes to proposed agreements. Contact Steve today to learn more.
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