Contracts – the small print / common mistakes
Contracts are fundamental to every business. They are the building blocks of trade. They are also regularly ignored or overlooked in favour of the demands of everyday life in business, only surfacing when something has gone wrong.
This is a vast area and a short article so the best way to maximise coverage is bullet points:
- Keep a signed and dated copy of all contracts, related correspondence, small print, order forms, invoices.
- Do you use terms of business? Make sure you bring them to the other party’s attention before the contract is entered into. Printing them on the back of invoices will not work.
- Read a contract very carefully before signing. Make sure you read what it actually says, not what you think it says or expect it to say. Is it clear and unambiguous? Does it cover everything necessary? Imagine what might go wrong and see how the contract would deal with that.
- Be clear who you are contracting with – an individual, a partnership (who are the partners?) or a limited company? If not an individual, is the person you are dealing with authorised to deal?
- Does the other party use small print? Is it referred to anywhere? Do you have a copy? Have you read it? Is it acceptable?
- Read the contract carefully before you do anything in relation to it.
- If you’re giving notice to end a contract, make sure that your notice complies with everything the contract requires – form and content, sent to the right person, at the right address, specifying the operative date, giving sufficient notice, sent by the right means and (if required) stating the grounds.
- If the other party is in breach, you must take reasonable steps if possible to reduce your losses. Keep a documentary record of everything you do to deal with the situation.
- Beware clauses excluding or limiting liability. If valid they may prevent you claiming for genuine losses. Often they are invalid, so if you rely on them take advice whether it is safe to do so.
- If you buy and sell, how do your purchase and sale contracts compare? Would you be “stuck in the middle” if your seller’s breach caused you also to be in breach?
- In over 30 years’ practice the most common mistake I have encountered is not taking advice, or doing so too late! A stitch in time usually saves nine.
This article is not intended to be comprehensive or to provide specific legal advice. It should not be relied upon in the absence of specific advice given in relation to particular circumstances. © Bowcock Cuerden LLP 2016