3 Things You Might Forget to Check in a ContractMar 09, 2022
This blog post was first published on 18 May 2019
Imagine working really hard to build your business, the late nights, the sacrifices, the investment (time and money) for it all to disappear because you failed to protect it.
I’ll share a post shortly (and link it here when it’s ready) on when it’s time to invest in legal protection but for the purposes of this post let’s assume you have a business and you are just about to enter into a contract for a new opportunity or perhaps you’re investing in a coach and you’ve been sent a contract to sign. Where do you start?
Before reading please be aware that this post is information only and does not constitute legal advice for you or your specific business.
What’s the first thing that you usually check in a contract?
What do you check first at the moment? The names of the parties? The payment details? Perhaps you double check the dates by when you need to deliver your content or services or when you can expect the other party to hold up their side of the deal.
Everyone starts in different places, I thought it might be helpful to explain the three things you should make sure that you always check in a legal contact before signing.
1. Jurisdiction and Dispute Resolution Clause
Okay so I promise I am a positive person and I don’t look for bad things to happen before you get started but there is something really important you need to check off.. One of the very first things I do when I receive a contract from a third party is turn straight to check the jurisdiction clause. It’s normally buried somewhere in the middle of the contract, perhaps close to the end, and it states which national court will determine any disputes. I’m looking for the jurisdiction to say England & Wales. There is a reason why the English legal system is so acclaimed across the world and part of that is due to the accessible and just way they handle disputes. This means that the contract will be governed by English laws and if you are based in the UK you’ll most likely want that too.
What will happen if the business relationship doesn’t work out?
Around this part of the contract you’ll also find the dispute resolution clause (sometimes it’s in the same clause with jurisdiction) this does exactly what is says on the tin: it sets out how disputes will be resolved between the parties. Here is an opportunity for you to prevent someone litigating a matter (going to Court) straight away. The parties can agree that they will resolve any disputes by mediation first.
It’s worth considering how this will impact both your reputation and whether it may assist in saving costs.
2. Entire Agreement Clause
In practice contracts can be start a number of ways:
Scenario One; two businesses start with either a chat on the telephone or a conversation over email. You’ll agree much of the detail between you and then one party might suggest a contract.
Or it can work the other way;
Scenario Two: you get sent a contract and then negotiate some separate terms. If you go on to sign the contract and it has an entire agreement clause then you need to make sure all of the additional terms find their way into the contract.
An entire agreement in effect says “this contract represents our whole agreement” it’s a way of adding clarity to what might have been months of emails back and forth - Scenario One - so it can be helpful to the parties. If you’re in Scenario Two, you need to be more careful as you don’t want to get caught the wrong side of the clause.
3. Exclusivity Clause
Often when brands work with influencers they will include an exclusivity clause. It restricts the signer from promoting the products of competitors during a set period. If you are signing a contract take a look through and check whether there is a clause to this effect because it may effect how much you want to be paid. If this deal will stop you from working with other brands or businesses for say six months you may wish to ask for more money. Or, you may want to clarify who ‘competitors’ are. You might be able to narrow this down to wearable technology brands only, rather than all running brands.
I NEED A TEMPLATE THAT INCLUDES THESE!!
If you need a contract for the services you deliver then I’ve got a template which you might want to use. Check out the Contract for Provision of Services contract template, over in the legal template shop.
I hope you found this helpful. If you did please pop a comment in the box below to let me know which tip helped the most.
Before you go, be sure to protect your business and get legal tips straight to your inbox via my weekly legal love letters. You can sign up and receive The Ultimate Legal checklist for your business by clicking here.
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