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Contracts: Fine Print Is Your Friend
One of the topics du jour is how we have all gotten into the online habit of seeing a bunch of legalese then skipping ahead to the end in search of that little box that says we read, understood, and agree to those preceding words. And we click the box, sometimes signing away rights we probably shouldn’t, because we say to ourselves, “Hey, what’s the likelihood any of that will ever matter anyway?” Many times, it’s a pretty safe bet, such as when you’ve just registered on the site that will tell you when your kid’s soccer practices and games are scheduled. Other instances, maybe not so much.
Depth of contract review varies greatly. There are contracts that are signed on the same day they were presented after only the page listing the fees was reviewed. There are contracts that go through a lengthy review process, with or without an attorney involved. It’s very understandable that not every organization without in-house counsel wants to take the time or incur the expense of review by an attorney. However, skipping at least a thorough read-through is not a good idea. Yes, it’s boring and it’s not always clear what some of that stuff means. However, contrary to popular belief, the fine print is your friend.
Attention to Detail
A contract should give you confidence if it says the right things. It is well worth the twenty minutes or even the hour it may take to read it. So, if you’re not going to pass a contract along to an attorney or someone in your organization who specializes in contracts, review it to make sure it does these things:
- Represents each organization and its role in the relationship thoroughly and accurately. Don’t settle for a contract that was originally for some other purpose and poorly adapted for yours.
- Clearly outlines responsibilities. Are they accurate, thorough, and reasonable?
- States what happens when someone doesn’t perform. Are the likely scenarios for the relationship addressed? Are the penalties and remedies reasonable and satisfactory?
- When and how does the contract end? Is there a notice period? Are fees pro-rated? If a transition period is necessary, make sure the details for that process are included.
- Most importantly, never rely on the special knowledge of one or two people. Put the contract to these two tests:
- 1) Could a reasonably intelligent person off the street understand how this contract works?
- 2) If the primary negotiators of the contract both won the lottery and quit their jobs today, could both organizations know how to administer the contract after reading it, say, twice?
Clarify Any Questions
- If something is unclear and you ask for an explanation of what it means, but the words on the page don’t translate to what you’re being told, ask for the language to be changed so that it is clear.
- If something seems to be missing from the contract, ask for it to be added.
- If there’s language pertaining to something that doesn’t apply to your situation that could cause confusion, have it removed.
When a contractual relationship is going smoothly, the contract is just long list of words that can stay filed away. But when a problem arises, it becomes the key to sorting things out. That investment of time (and perhaps money) that you wanted to avoid in the beginning is a small price to pay to keep a relationship serving your interests and the lawyers off your payroll.