on Friday, 16 October 2015.
There are multiple things to think about when you are entering into a contract to buy goods and services on behalf of a business and it can be a pretty daunting process. Although ultimately you must understand and be comfortable with each of the clauses in the contract, it is always helpful to think about the practicialties of what the contract means for your business. Being really clear on these three things is a great starting point:-
- How do I get out of the contract ? It seems counter intuitivie to think about the end at the beginning but if you can extract yourself easily and cheaply, that can be a significant risk minimisation measure. For example, you should understand whether you can exit before the end of the term and if so , whether there are any penalties for that . Conversely, be really clear on how and whether the service provider can extract itself and whether its exit will leave you high and dry.
- Does the contract describe in language which is crystal clear exactly what I am buying?. Be very wary of including language which only an expert in your industry would understand . The language might seem obvious to you, but the ultimate test is what an outsider (a court or judge) would understand the description of the product to mean. Lack of clarity is a significant risk in any contracting arrangements.
- Price - as for the description , be 100% clear that the pricing in the contract reflects your negotiations and that it is expressed in a way that is beyond dispute . Be clear on any penalties for late payment and of any automatic renewals which may require you to pay for another year of the service if you do not give specified notice.
Counsel on Demand runs training courses for businesses wanting to increase their knowledge in the contracting sphere. Please contact us for more information, or see our Training page.