Checkpoints to consider when making commercial agreements
We work and connect with people, but very often business formalities require a binding agreement between individuals and parties, to ensure that each side is safe and protected. No matter what your equation is with another person, it is always to safeguard your firm, by ensuring commercial agreements are in place. Steinepreis Paganin (http://www.steinpag.com.au) is an independent law firm offering clients specialised and comprehensive advice on a range of equity capital markets, mergers and acquisitions, corporate and commercial, energy and resources and financial services matters. They seek to understand a clients’ objectives and deliver service in an innovative, professional and constructive manner. Since service, quality and value for money are paramount, the highly qualified staff are focused on understanding the needs of a clients and working with them to achieve their corporate and commercial objectives.
When setting out agreements it is a good idea to review the agreement instead of just a glance over a contract and don’t just sign it without really knowing what it obligates you or the other party to do. Here are a few basic guidelines you can check when reviewing a contract:
- Use the complete name of the business and correctly identify the parties. Understand the rights and responsibilities of both sides. These are normally distributed all over the contract, so make sure you understand these well.
- Leave no blanks so there is no scope of it being filled by someone later. If there are any deletions or changes, then make sure these are initialed.
- Look out for automatic renewals. Be clear about dates. Don’t default on any of the dates mentioned in a contract. What is the notice period required for a non- renewal? If notice is not followed, is there a penalty clause in the agreement? Does a renewal incur a price increase? If yes then how much?
- Check if there is a separate clause on defaulting. What acts are considered as defaulting. They must be mentioned in the agreement. Also determine the worst case that can happen if you default. What are the remedial provisions? Can you limit your liability? what about the remedial action from your side incase the other party defaults? What type of remedies do you need in place, if this happens.
- These take just a bit of your time but if you take the time to review the contract thoroughly, you can negotiate on many things, which in the longer run, works for you.