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Reviewing Commercial Contracts: The Business Owner’s Guide
17 August, 2023 | Chantal Laidler
A contract is a legally enforceable agreement and can cover many business relationships (including standard terms and conditions, supply agreements, licensing agreements, franchise agreements, distribution agreements and many more). A well drafted contract can mitigate risk and set parties up for a successful working relationship which is why it is important to review all contracts carefully and understand how to navigate the legal implications contained in them – ideally before they are signed.
The significance of expert commercial contract review
Contracts play a key role in the day-to-day operations of a business and therefore it is important to understand your obligations, risks and rights – and to ensure the contract correctly represents the intended relationship between the parties.
Before signing a contract, the first step should be checking that the contract correctly records the parties’ names, and that other key terms are as you expect. You should then have a lawyer review the terms carefully to identify any risks to you and to ensure your interests are protected.
Effective contract negotiation strategies
Contracts can be drafted in a way that exposes businesses or their directors to unnecessary liabilities and risks. Re-negotiation of these clauses and careful redrafting can ensure you are protected and promote the business’s financial and operational well-being. Ambiguous contracts where terms are unclear or burdensome can lead to costly disputes. As contracts set out the obligations, responsibilities and rights of parties involved it is important to ensure your interests are adequately and fairly represented and any rights (such as intellectual property rights) are accurately represented. A contract should contain the necessary safeguards to protect assets, confidential information and your rights on termination. Each clause in a contract needs to be read in line with the business’s objectives.
Ensuring New Zealand Law Compliance in Contracts
As more New Zealand businesses expand and enter into agreements with international suppliers and customers, we see an increasing number of contracts drafted offshore. It is extremely important in these circumstances to make sure that the terms comply with New Zealand statutes and regulations and protect businesses from inadvertent non-compliance (for example not entering into an anti-competitive or cartel type of arrangement).
Terminating a business contract
In the circumstance that you enter a contract without first obtaining legal advice and encounter issues or wish to terminate or assign your rights under the contract, the contract needs to be read carefully to determine next steps. If the contract contains dispute resolution and/or termination provisions these will need to be checked for any prescribed notice periods and conditions with any early termination carefully recorded in writing. Smith and Partners can discuss your needs and review your contract to advise on the best course of action to resolve any issues such as recovering unpaid amounts or rectifying unfulfilled obligations – and to avoid inadvertently breaching the contract.
Safeguarding your business success
At Smith and Partners, we recommend careful review of all contracts before they are signed so that any disputes are mitigated from the beginning of the relationship between the parties. This may involve negotiating terms or advising you of your potential risks and obligations so that you can make an informed decision before signing a contract and being bound by the terms and conditions.
As the owner of any sized business, review of your contracts and agreements should be a priority to safeguard your success. Whether a new business or established business, protecting your interests, identifying risks and negotiating favourable terms are crucial steps in maintaining and establishing a strong foundation for your business.
Contact us today to gain peace of mind that your contracts are compliant, tailored to your best interests and business needs and robust enough to withstand any unforeseen events which may arise.
Ignoring the fine print can lead to disputes, lost opportunities, and financial setbacks. Act now to secure your business’s future. Reach out to expert commercial contract lawyer, Chantal Laidler at 09 837 6833. Or email email@example.com. Chantal’s expertise ensures that your contracts are airtight, protecting you from legal challenges that could disrupt your journey. Your business deserves nothing less than the best – don’t wait to make that call.