What to Watch Out for When Signing Another Company’s Contract

When you’re signing someone else’s contract, you need to really understand what you’re agreeing to. Otherwise, you could be signing important rights away.

Here’s a list of provisions to look out for when signing another company’s contract. 

1.    TERMS AND CONDITIONS: 

In general, you need to take a close look at the contract’s terms and make sure they're crystal clear and tailored to your business’ needs and goals, as well as the agreement between the parties. 

2.    CONTRACT LENGTH: 

Know how long the contract will last, and make sure you're not locked in for longer than needed.

3.    SCOPE OF WORK: 

Make sure whatever deliverables are being provided and the timeline are as specifically spelled out as possible.

4.   PAYMENT TERMS: 

Check the payment terms to make sure they're fair and match up with your business' cash flow. Make sure they’re specific as well so each party knows who’s paying, how, and when. Also watch out for any automatic discounts or added fees. 

5.   LIMITATION OF LIABILITY AND INDEMNITY PROVISIONS: 

Make sure you’re fully aware of your liability and indemnification obligations, and if you’re taking on too much risk, negotiate those terms to be more clear. More on limitation of liability and indemnity clauses here. 

6.   TERMINATION PROVISIONS: 

Make sure the termination provisions allow you to end the contract if needed, and make sure the terms are fair. These tend to be one-sided, so make sure if the other party can get out of the contract, you can as well. 

7.    GOVERNING LAW AND JURISIDICTION: 

Know the laws and jurisdiction of the contract to ensure it's enforceable and follows regulations.

8.    INTELLECTUAL PROPERTY RIGHTS: 

Look out for the intellectual property clauses. Make sure you really understand the intellectual property provisions to ensure you're not giving away any valuable rights.

9.     DISPUTE RESOLUTION:

Check the dispute resolution terms to make sure they're fair and align with your business goals.

10. ONE-SIDED CONTRACT PROVISIONS:

Also, make sure to look out for anything that’s one-sided. Usually, one-sided contract provisions should be negotiated so they’re fair for both parties.

Remember, it's always smart to have a lawyer review the contract to make sure it's compliant with applicable laws, fair to all parties involved, and tailored to your company’s specific needs.

If you ever have any questions about contracts in your business, we’re happy to help. Book a call here.