Given that a contract is an agreement between parties, there are an infinite number of ways that parties can agree and a contract can be written. There are some common contract evaluation methods worth reviewing before signing a contract, however, to ensure that it will suit your needs.
- Can you get out of it?â€“ A contract is great, until you donâ€™t want to be in it anymore. You could agree to a 15 or 30 day termination upon notification, or if that is not possible, perhaps a 30 day termination upon notice after one year.
- Automatic renewal â€“ Do you want an automatic renewal? They can be convenient; however, do you want to be automatically recommitted without affirmative action? Automatic renewals are very common with online services, such as caregiver advertising or credit report monitoring, and often are written in the â€œsmall print.â€
- What happens in the event of a breach? â€“ Do you have the right to terminate unilaterally or will there be a notice and cure period?
- Assignment â€“ Do you want to have the ability to assign the contract to someone else? Contract assignment occurs when one party to an existing contract gives the contractâ€™s obligations and benefits to another party. Of course, the other party to the existing contract must be notified of the assignment.
- Governing Law and Jurisdiction â€“ It is always best to have the governing law and jurisdiction be in your home state and, for federal court in the federal court located in your district. Of course, the other party wants the same thing. This is not an issue if you are both in the same jurisdiction.
- Indemnification â€“ If there is an indemnification clause, it should be mutual. An indemnification provision in contracts shifts potential costs from one party to the other. The primary purpose of an indemnification provision is to protect the indemnified party against losses from third party claims. For example, if a prime contractor loses a contract, they may have to indemnify the subcontractor for any related losses.
- Collections â€“ If one party has to collect from another due to nonpayment, ensure that the nonpaying party bears the burden of reimbursing the collector for the collection fees.
- Remedies â€“ What will happen if the contract is breached? How will you be compensated?
- Dates and Deadlines â€“ It is very important to be specific about dates and deadlines in any contract. A contact may be essentially unenforceable if it does not specify when a party to the contract is required to perform on the contract.
- Rights and Responsibilities â€“ Know your rights and responsibilities under a contract. A contract is binding and absent a provision allowing you the ability to terminate, you may not be able to terminate or terminate without penalty. If a contract was not binding and enforceable, it would have little value.
If you have a legal issue you need help with, the attorneys at Whitcomb, Selinsky Law PC would love to share their expertise with you. Please call (303) 543-1958.