This is a topic I was most excited to write about!

A major part of our work requires us to review contracts for our clients received from the other party.

These contracts cover various kinds of transactions: partnerships, services, licensing, collaborations - you name it.

Contracts are pretty much everywhere.

And I do advise people to have a written contract in place for major dealings.

But do you know what's worse than having no contract at all?

A badly written one.

Till now, my team and I have completed over 300 projects.

And because of that volume, we have come to find some common issues in contracts.

I am talking about some red flags we commonly see.

Common Red Flags We See In Agreements

There's a reason I am telling you this.

Sometimes, a lawyer might be out of your budget.

And sometimes you might stumble upon signing an important deal.

Now you can only get a proper review from a lawyer after you have the money.

But what if you don't?

Well, watch out for these then.

1) Deliverables or Responsibilities are not clear

Be it any kind of transaction, both parties have certain responsibilities.

And they are usually covered under the “Deliverables” or "Responsibilities" section.

In many scenarios, people just write a brief summary about what’s expected, and that’s it.

And this is even more true for downloaded templates when a person doesn't know what they are doing.

And this is probably the best way to get into a dispute later on.

As time goes on, the other side might have different expectations.

And this only leads to:

a) Either the service provider feeling exploited - or having to deliver more than expected.

b) The project is halted because the client doesn't agree to revised costs or fees.

Now how can you avoid this?

You focus on the Scope of Work or SOW as we call it.

Make it as detailed as you can.

Focus on minute details that could be confusing for some and cover those.

That's how you will avoid scope creep.

If you expect something to happen, then make sure it's covered in the contract.

2) Timings in Arrangement are not clear

Now let's suppose Party A has agreed to do something for Party B.

But by when?

Sometimes this is left entirely unclear, or random timeframes that don't make sense are provided.

Sometimes, one party requires the other party to deliver within a particular timeline.

BUT!

They fail to mention whether “time is of the essence”.

This small phrase makes a lot of difference in the consequences of failing to deliver on the agreed timeline.

Because you are telling the other side that the delivery time holds importance.

Now everything comes down to the context.

While I do agree that adhering to a specific timeline is not practical in many transactions.

However, an attempt should be made to define the timeline, along with means of extension, if required.

And don't leave this to mutual understanding, or your project may never reach completion.

3) Dealing with Termination

There's never, or hardly ever a case, where things go smoothly.

There are always so many contingencies you could not think of at the time of entering into the contract.

And because of this, either you or the other party might want to leave the project.

Now how you end that relationship becomes important.

Because you want to make sure that everyone is happy in the end.

And if the contract is not clear on how one party could terminate the contractual relations, then it could lead to disputes.

So look at your Termination Clause and make sure the following questions are answered:

a) How can one party terminate the contract?

b) Does the party have to serve notice of termination to the other party?

c) What's the notice period that's required to be followed?

d) Under what circumstances can a party terminate the contract?

Those 4 basic questions should always be answered.

4) Post-Termination

Now say for example you or the other side have terminated the contract.

But now what?

A contract doesn't end with the sending of a termination notice.

Handling the aftermath can be tricky!

a) What happens to payments made or remaining?

b) What about the deliverables?

c) If any confidential data were shared, what would happen to that?

You see, once you start asking questions that's when you see the problems.

Termination usually happens on bad terms.

And asking others to do certain actions for you post-termination is not really easy.

Unless your contract requires them to do so.

That's it!

I hope before you sign your next contract you answer some of the questions that were addressed here.

And also, remember the golden rule:

If you don't completely understand what the contract says, then don't sign it.

Get it reviewed.

Get it amended!

Make sure it aligns with your expectations for the deal!

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