Avoid boiling water and get your boilerplates checked
Commercial contracts are a key cog in many businesses across a broad spectrum of industries. These can range from a simple contract in respect of your photocopier to contracts of greater importance like an agreement with a distributor or key supplier of goods or services that are essential to your business. In an episode of Eastenders many years ago 'Jeanne Butcher' imparted pearls of wisdom to a fellow character who was reviewing an important contract and suggested that he check the clauses at the back as "that's where they hide all the sneaky stuff" for example early termination charges; in true Eastenders' excitement she was right! That scene has always stuck in my memory as there is merit in what 'Jeanne' was saying. Pouring over contractual terms, particularly contracts full of legalese, is often coined with bedtime reading because it can easily put most people to sleep. There is a huge temptation to check the price is correct and ignore the rest. But...the remaining clauses may contain onerous provisions that once the gravity of these provisions is unlocked you may not be quite so willing to gloss over. Similarly, as important as the 'fine print' are the 'missing clauses'. Often an agreement can appear to be in standard format but actually a number of the protections for your business that should be built into the contract are omitted. The trouble with these clauses is that quite often if the contract is performed as the parties intend they will never come into play and it becomes all too easy to forget their importance. It is only when things start to go awry that these unassuming clauses really come into their own. Not surprisingly the economic downturn has a knock on effect and more and more frequently we are advising clients who are seeking to rely on agreements that would never have been given the green light if they had have been reviewed at the appropriate time, and as a result these clients are finding they have no contractual protection at a detriment to their business. When entering into a contract a good starting point is to assess how important it is to the functioning of your business and what the implications will be if you or the other party fails to deliver. If it is a contract that falls into the 'important contracts' pile then safe is always better than sorry and we would recommend that you get your boilerplates checked to avoid boiling water. Rebecca Burford, Associate, Corporate Department - For further information or advice contact rburford@callaghans.co.uk or mwells@callaghans.co.uk
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