Commercial Contract Review and Advice

Most commercial agreements are presented as standard. Very few are neutral. A document drafted by the other side allocates risk to the other side's advantage, usually in clauses that look procedural and attract no attention during negotiation.

A review tells you what you are agreeing to, which points are worth pushing on, and which are ordinary and should simply be accepted. We would rather give you three changes that matter than thirty that make you look difficult.

What we look at

What is actually being promised

The scope of what each party must do, the standard it must be done to, and whether the obligations are as clear as the commercial discussion was. Vagueness in the scope clause is the most common source of later disputes, and it is usually the client's own description that is vague.

Money

Price, what it includes, how and when it can change, invoicing and payment terms, interest on late payment, and whether payment obligations survive termination or suspension. In services agreements, whether the customer can withhold payment for alleged defects and on what basis.

Liability

This is where the value of a review usually sits:

• limitation of liability clauses, including caps and exclusions of consequential loss, and whether the cap bears any relationship to the risk
• indemnities, which are frequently one-way and much wider than the party giving them realises
• whether liability is joint and several
• insurance requirements, and whether your policy actually covers what the contract requires you to insure
• warranties given, and how long they last

Ending the relationship

• term, renewal, and whether renewal is automatic
• termination for convenience, and whether it is available to both parties or only one
• termination for breach, the cure period, and what counts as a material breach
• what happens on termination: payment for work done, return of property, transition assistance, and which clauses survive

The clauses that catch people out

• Personal guarantees buried in the execution pages or the credit application.
• Restraints of trade, their scope, duration and geography, and whether they are likely to be enforceable.
• Intellectual property, particularly who owns what is created during the engagement.
• Assignment and change of control, which can prevent you selling your own business without the counterparty's consent.
• Exclusivity and minimum volume commitments.
• Dispute resolution and jurisdiction, including clauses requiring you to litigate interstate or overseas.
• Set-off rights allowing the other party to deduct disputed amounts.

Small business contracts

Standard form contracts with small businesses are subject to the unfair contract terms regime, which can render offending terms void and now carries significant penalties for proposing them. That cuts both ways: it may assist you if you are the small business being presented with a document, and it is a real compliance issue if you are the one issuing standard terms. We flag terms that are exposed in either direction.

What you receive

A written review setting out the issues in order of importance, what we recommend you ask for, and what we would accept. Where you want us to, we mark up the document and deal with the other side's lawyers directly. Where the answer is that the contract is reasonable and you should sign it, we say that.

This page is general information. It is not legal advice, and the terms of the agreement in front of you will change the answer.