Key Points to Check Before Signing a Commercial Contract

A contract being legally valid does not mean it is workable. The purpose of a pre-signature review is to assess the document not only for compliance, but for whether it actually protects the commercial interest. The points that are hardest to change after signature are often the ones that slip past at this stage.

Clarity of the parties and the subject

The parties to a contract, the authority to sign and the subject matter should all be clear from the outset. Ambiguity lays the ground for differing interpretations and future disputes. Verifying the authority of the person signing on behalf of a company, in particular, prevents objections that may arise later.

Defining obligations and delivery criteria

What will be delivered, when and under which conditions? When these answers are not written in measurable terms, the parties can understand the same wording differently. Delivery criteria, the acceptance process and performance standards should be made concrete.

Using measurable definitions instead of vague wording makes performance easier and strengthens the position if a dispute ever arises.

Payment terms and security

The payment schedule, the consequences of delay and any security mechanisms should be set out clearly. Payment arrangements that rest on verbal agreement may build trust in a commercial relationship, but they offer no legal protection.

Liability, termination and dispute resolution

The limits of liability, the circumstances in which the contract ends and the route to be followed if a dispute arises should all be settled in advance. A competent court or arbitration clause can make a considerable difference in time and cost once a dispute begins.

Uncertainty around termination puts the parties into unforeseen situations. For that reason the procedure and consequences of termination should be written plainly.

Frequently Asked Questions