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Contract review: 5 things to check before signing a contract

Contract review: 5 things to check before signing a contract

on December 21, 2021

A contract review is a crucial step in the contract management process.
Before signing a contract, a contract review allows a full check of its clauses to avoid an unwary acceptance and the risk of committing to obligations that can’t be fulfilled. 

Through a contract review, a business can avoid wasting valuable time, and financial resources for disputes that could occur in case of a future legal claim. 

A contract review always reveals itself as a much less expensive step compared to the risk of a breach of contract lawsuit. 

Across a contract review, a company can verify the accuracy and compliance to the contract’s terms before signing it, providing both sides with the opportunity of a complete acknowledgment of the terms to be upon.  

The process includes:  

  • Clarifying of contract related facts 
  • Measuring of the feasibility of contract 
  • Forecast of contract risks 

A contract review represents the last chance to examine each passage to identify any unclear or incorrect element, any ambiguous term, error, or discrepancy to promptly request needed changes before the contract would get locked into a satisfactory agreement. 

Which are the main advantages for a business by conducting a contract review:  

  • Mitigate risk 
  • Reduce legal spending 
  • Speed up business processes 

A full contract review can be performed across the following 5 quick steps: 

1 – Check the Level of Transparency 

Contracts can contain some tricky language that sometimes can make the terms confounding. 

Reading the entire contract in full, paying attention to any confusing or misleading wording that might be included, ensuring that the contract contains the correct details is a crucial step to prevent legal disputes. 

2 – Review the Language 

A contract review is always decisive to pay close attention to how each sentence is worded and look for language that could be left up to interpretation. Even if both parties interpret unclear terms the same way, it’s recommended to revise the language as scrupulously as possible to prevent any potential conflicts that could occur once the contract is signed and active. 

3 – Focus on Key Clauses and Terms 

Some clauses and terms are more meaningful than others. The most important contract terms are likely to vary as well, given that every company and industry is different. There are a few to pay close attention to. Terms like confidentiality, indemnification, termination and dispute resolution are all important sections of a contract. It is therefore worth spending extra time reviewing to be sure all terms are laid out explicitly and the language is adequate.  

4 – Pay attention to Obligations and Prices 

Before signing a contract, checking both your obligations and the obligations of the other party is another fundamental step. This is particularly important if your contract involves either party providing ongoing obligations over time. To ensure that your business can run smoothly, you need to be clear also on the price you will be paying or receiving under the contract. Double-check the conditions for you to pay or receive that price. 

5 – Review Termination and Renewal Rules 

Contracts typically encompass an agreement for a certain, predetermined amount of time. This means that there will be rules and regulations for the termination of the contract or renewal of its terms. It is particularly relevant to verify if the contract will automatically renew and also how you can terminate the agreement if you do not want to renew it. 

The fact that an agreement was signed and accepted initially shouldn’t prevent you from regularly reviewing it and looking for new opportunities to optimize or refine the terms, or taking steps to terminate the contract if certain situations would occur. 

Trakti is award-winning contract negotiation and management platform supporting procurement, sales, and legal functions to run end-to-end. 

Thanks to the power of blockchain technology, Trakti lets you certify and notarize your contracts and keep them safe and immutable. 

Trakti is fully automated,  fully compliant, and based on secured procedures, it helps you support your team during the entire contract life cycle management with a unique and compliant no-code platform, accessible to everyone, as it doesn’t require any coding skills. 

With Trakti you can increase team collaboration and productivity, and reduce administrative costs at the same time. 

The Trakti platform improves your contract management process by making the contract review more efficient and accurate than ever. 

Ready to discover more about Trakti? Click here. 

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