At the beginning of a business relationship, parties are excited to get started – to get the contracts signed and get on with their project. Ironing out the specific terms of the contract seems like a dry, uninteresting and tedious exercise when compared to the excitement of starting a project, moving towards its completion and, the very best part, getting paid for it!
However, prudent business practices require us to take a moment to be a little bit of a worrier. We need to protect ourselves and think about what might go wrong and try to put terms into our agreements that will address any foreseeable trouble spots.
The usefulness of a clear agreement embodying the terms of the bargain the parties have struck is obvious in the event that a dispute arises. However, the exercise of taking the time to consider and negotiate around the issues below is also an extremely valuable exercise for parties who want to make sure they get the most out of the transaction, whether or not a dispute arises.
The meat of the matter: Is the subject matter of the contract clearly defined? Are the conditions of satisfaction well established? How are variations and delays going to be treated?
Are payment terms clear? Do you need a deposit to get started? What happens to the deposit if the agreement is terminated before completion?
Proper parties : Do you have the power to do everything you say you will do under the contract? In an agreement for the sale of land, do you have the power to deliver good title you have promised to the purchaser?
Third Party Approvals: Are any third party or government approvals or consents required? Is it easier for one party to procure whichever approvals are necessary? Is it clear who will bear the responsibility and expense of procuring these approvals? Is it a situation in which the parties will have to work together to provide the necessary information, and if so, is this clearly stated?