Contract Review Checklist: Everything You Need to Know
The contract review checklist is a comprehensive list of every key component that should be examined whenever you are going to sign a contract.3 min read
2. Why Is Contract Review Important?
3. Contract Review Checklist
4. Trust the Professionals
The contract review checklist is a comprehensive list of every key component that should be examined whenever you are going to sign a contract. It functions as the bare minimum that one should do before agreeing to anything but is no replacement for a professional lawyer.
What Is Contract Review?
Contract review is the act of analyzing an entire contract with painstaking attention to detail. This is done to ensure that the conditions laid out are in your best interests. The original document is quite likely to have some term or condition that you may find unnecessary or unfavorable.
If you sign that kind of document without giving it a run-through, then you'll be hard-pressed to have it changed after the contract is signed.
The biggest misunderstanding that a business owner can make is to think that the original contract given to you is absolute. Negotiations are normal, but you must be the one to initiate it.
Why Is Contract Review Important?
Reviewing contracts before signing them can help you avoid a lot of trouble in the future. For instance, if the contract you signed was illegal, you would still have to go through a legal process to have that settled.
Contract reviewing also allows you to maintain strong relationships with your partners. If you or another member of the contract is blindsided by some previously unknown condition, then all the goodwill between the involved parties will immediately vanish.
Smart contracts are the best way to keep allies on your side.
Contract Review Checklist
The contract review checklist is a valuable tool if you intend on signing a contract without the assistance of a lawyer.
Before signing any contract, you should pay close attention that:
- The terms and conditions of the contract are satisfactory for you. These are always negotiable between companies, so don't hesitate to bring up any issues you have with the original offer.
- You know who everybody involved in the contract is. Also, consider if an individual that you're working with is currently in a marriage and if their spouse will have any influence over the contract.
- You have filled in every space. You don't want to risk having anyone filling in details that you were supposed to.
- The terms and quantities are correct. You must be absolutely sure that any business terms and amounts stated on the contract truly represent the intentions and understanding of all parties.
- Renewal terms are fully understood. Will the contract renew by default? Will the renewed contract be changed from the original?
- Risks have been fairly allocated. Risks are typically transferred to the party that faces the least risk in the agreement. Make sure that all of the risk is being shouldered fairly.
- You are aware of any indemnification and hold harmless agreements. These mean that certain parties will not be held accountable for any damages or losses that come from the contract.
- You are aware of reference documents tied to the contract. Always read through these as thoroughly as the contract itself.
- You understand the terms of default. Under what conditions will a party have failed to deliver on the terms of the contract, and whether you will be able to fulfill the conditions without defaulting.
- You understand the remedies provisions. You need to know what the worst-case scenario is if you were to default, find ways to shift liability to someone else, and determine what actions will need to be taken if a default were to occur.
- Some other details of the contract are also understood, such as termination, deadlines and important dates, warranties, representations, responsibilities and rights, and dispute resolution.
So long as these elements of the contract have been closely examined and agreed upon, there shouldn't be any problems. That said, while it may be streamlined a fair bit, it's still a lot for a single, inexperienced individual to unload by themselves.
Trust the Professionals
If there is any uncertainty about any aspect of the agreement, it would be advisable to hire a contract review lawyer to review the contract for you. If you deem it necessary, also have them use the contract review checklist so that you can be sure they didn't skimp on any important details.
If you need help with reviewing a contract, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.