According to a Brief History of Cunning (podcast), Machiavelli said:
one must be a fox to recognise traps and a lion to recognise wolves
This struck a chord because as a contracts expert, one of my services is to review contracts on behalf of contractor and specialist subcontractors to identify a range of issues. If you want to review your own contract, then you should focus on:
- in whose interests the contract is drafted – this acts as an executive summary of the whole contract; sadly it is rare to find a contract that is fairly drafted to balance the interests of both parties
- how the parties can suspend or terminate the works or services being provided – although rarely reviewed by a tenderer, if the client has wide rights to omit works, terminate or suspend without paying for lost profits, then this goes against the nature of a contract (the right and obligation to finish all the works and services)
- key items for further negotiation – these may be unrealistically tight procedural requirements and conditions precedent; rights of set-off or deduction; indemnities especially when not related to breach of the contract; fitness for purpose obligations
- the impact/role of the main contract (and other agreements) in any subcontract – often a subcontractor is required to read the main contract, comply with its obligations and indemnify the contractor if there is a breach of the main contract, even if that term was not directly included in the subcontract
- limits on liability – does the contract limit the liability of the provider? If not, why not?
- key risks – identifying any risks allocated to the contractor such as site conditions, illegal or impossible requirements, force majeure.
In my experience, it is difficult for a technical specialist to spot the legal traps and vice versa. So while I cannot report on whether the scope is achievable, I can help you spot if the contract exposes you to risks you haven’t even considered or requirements you would not expect, or involves betting your business on the roll of a pair of loaded dice.
I am not merely a contracts expert, but I am also a Fox (Sarah, family name by marriage). When I review a contract, I am looking for contract traps.