What to look for in a contract

Let’s say you have a contract provided to you by a vendor. It looks like a printed form document that is full of boilerplate. Do you assume it’s all “standard” language and just sign?

Of course, as a lawyer, I always advise people to read things before they sign them. Even things that look like form documents that are truly boring as all-get-out to read through.

Why? Because hidden in that “form” language may be things that your business actually can’t live with. Things that would cause you to breach the agreement and then maybe not receive the goods or services you need. Or things that would cause you to lose money on the deal.

I look out for certain hot buttons when reviewing contracts. In addition to getting all of the primary terms right (like pricing and scope of work, which are always a focus of attention), even boilerplate provisions can be problematic. For example, there may be indemnification clauses where you have to pay the other party if something goes wrong, and “something goes wrong” is very broadly defined. What about a provision stating the term of the agreement effectively lasts forever? (What will you do if you want to terminate the deal?) Or how about a provision requiring you to pay attorneys’ fees if there is a dispute and you lose? What if you are asked to waive some of your rights? And what if the vendor caps its liability to you?

All of these terms appear frequently in pre-printed form agreements, and not all of them are things that you have to live with. Remember one rule: Everything is negotiable! With a reasonable approach, you can often change the terms of even a “standard form” to more appropriately align with what you think is a fair deal. It is worth the effort to try.

Categories: Contracts