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What to do before you sign a legal contract

A contract is a legally binding agreement made between two or more parties. As a contract is legally binding, it is critical for you to spend the time to make sure that you get it right.

Read it from start to finish

Make sure you read the contract from start to finish in order to ensure that it includes everything you want it to include and does not include anything that shouldn’t be there. People often say ‘Make sure you read the fine print’. This is true, but it is equally true that you should read the whole contract.

You should also read a contract from start to finish to ensure that you understand all of it and that it is consistent with any negotiations that you have had with the other parties.  Quite often a contract includes a clause that says ‘the written contract constitutes the whole agreement between the parties’.

This means that any matters discussed during the course of negotiations that are not included in the contract do not form part of the contract and are therefore unenforceable. If you sign a contract that contains such a clause then it generally does not matter what you negotiated and agreed verbally, because that’s not reflected in the contract.

Take your time

This builds on the first point. Do not be pressured into signing a contract on the spot. Take your time, take the contract away with you and read it from start to finish. If you do not take your time then it is unlikely that you will properly read and understand the contract before signing it. This could be dangerous.

Negotiate the terms

Don’t think that just because someone gives you a standard written contract that you cannot negotiate changes to it. That may appear to be the case, but quite often it is not.  If you are not happy with a clause in a contract, then do not agree to it. Try to have it changed. If the other party does not agree to change it then you can decide at that later point in time what to do.

Make sure the contract is complete before you sign it

It is not unusual for someone to hand a contract to someone else, particularly a standard written contract, and ask them to sign it. If you do not take your time to read it from start to finish and negotiate its terms (see all of the points above), then you may not notice that there are some blanks in the contract or details that haven’t been completed. If the whole contract has not been completed, then do not sign it.

Tell the other party that you will not sign it until it is completed. If you sign it before it is completed then there is a risk that the other party will insert something in the contract that you do not agree with. It is not worth the risk.

Seek advice

If you don’t understand any part of the contract then you should seek legal or other advice before signing it. Don’t feel uneasy if you do not understand part of the contract. Contracts can be complex and written in legal language, so it is not unusual for people to find them difficult to understand.

It’s important that you understand all the terms of the contract before agreeing to sign it. You could be exposed to unknown risks if you do not seek advice where appropriate.

After you have signed a contract make sure that you get a copy of it from the other party. This must be a complete copy, signed by all the parties. In some cases, the parties will sign separate counterpart contracts and give to each other their signed contract.

Even so, it is always best to have a complete record of what has been signed by both parties, so if you are handing over your original signed contract to the other party, then you should keep a copy of it.

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Lachlan McKnight

Lachlan McKnight

Lachlan McKnight is the CEO of LegalVision www.legalvision.com.au. His goal is to disrupt the legal services industry by providing online, cost-effective and high quality legal advice to small and medium business.

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