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How to successfully review a contract

Business owners will likely sign many legally binding contracts over the course of their career. Contracts are often full of legal jargon and overly-complicated phrasing, which might tempt you to sign without analyzing its terms.

However, the contract may contain a clause that can come back to haunt your company. Before you agree to the terms, be aware of what you and the other party must do to fulfill your promises. There are a couple key strategies to reviewing contracts.

Check when it ends

A contract usually contains rules that tell you when the contract will cease. Look for the termination clauses to see how you can stop the agreement. If the other party breaches the contract, you should be able to end the contract as soon as you can. Also, take note of your own actions that could cause termination.

Some contracts may automatically renew on a certain date. Read through the document to make sure you know how to cancel a renewal.

See how it changes

The other party might be willing to take advantage of business owners who don’t understand their contract. For example, a vendor could raise the cost of their services over time and claim that the terms allowed them to revise the contract without your approval. Make sure that changes to your ongoing contract must have your approval first.

Have a professional translate

Many business owners don’t have time to learn legal jargon and potential implications. If the contract was drafted by the other party, it may be in your best interest to ask a business litigation attorney to review the document on your behalf.

In the future, your contract will provide a solid foundation for your working relationship with the other party. A court will most certainly examine its terms if you eventually face a dispute. This is why anyone who signs a contract should know exactly how it will affect their company down the line.

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