Review Your Contract: Recognise Traps

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.

What should you do?

If you want to review your own contract, you need to read every word. Although you can focus on the STAR aspects, you could summarise those under different headings such as:

  • 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 – 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); rights to cancel or terminate should be mutual
  • 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 other agreements on your contract – if you are acting as the subcontractor, are you 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? if you are a consultant, do you have to comply with third party agreements which you haven’t seen?
  • limits on liability – does the contract limit the liability of the provider? If not, why not?
  • key risks – identifying any risks allocated to your company 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.

Like this article?

Share on facebook
Share on Facebook
Share on twitter
Share on Twitter
Share on linkedin
Share on LinkedIn
Share on pinterest
Share on Pinterest

Leave a comment