10 Things to do Before Signing a Contract
Signing a contract without proper awareness can expose you to multiple legal obligations you may not be ready to handle. It’s important to understand the gravity of a legal contract and, also be aware of your available rights and remedies should you run into issues. Since entering a contract is usually easier than getting out of one, you should always consider doing certain things before signing on the dotted line. This blog will outline 10 things to do before signing a contract.
10 Things to do Before Signing a Contract
1. Consider Your Options
Never go with your first option without considering others. There may be a better price, deal, or partnership out there, so you don’t want to box yourself in by signing right away. The more knowledgeable you are about your options, the more leverage you may have to get a better deal. It is also advantageous to shop around because it may help you determine whether a person/organization is being dishonest with you.
2. Reference Checks
Never underestimate the power of a good or bad reference. If you are about to sign a contract with a well-known business, look up their reviews to understand the experiences others have had with them. If you are dealing with a business or individual on a smaller scale, still try to do your due diligence. You may have friends, family members, or co-workers that have worked with that individual or company. This will help you make a well-rounded decision when choosing whether to sign the contract or not.
If the company is listed on Google, you may be able to find reviews there or you can look up the business on the Better Business Bureau site. References can also help you determine whether the contents of a contract are true because you will be able to compare what you’re being offered to what other people have actually received.
3. Put Everything in Writing
This may seem obvious, but it is still important to reiterate! Every single term and condition you are agreeing or disagreeing to should be put in writing. Sometimes during contract negotiations, certain terms are promised to move the deal along. However, you may end up signing the contract with only verbal assurance from the other party regarding the additional terms.
If the other party does not deliver those agreed upon terms, you will run into difficulties when trying to prove you are owed more than you agreed to in the contract. If you face resistance when asking that verbal terms be put in writing, that should alert you to proceed cautiously.
4. Negotiate
Negotiations are an effective and expected part of contracts. Most contracts can be negotiated – even if that fact isn’t disclosed at the forefront. There may be terms that you do not want to agree to, and the other party may have similar concerns. This is where your research will come in handy. If you know other places are offering better prices for example, you can approach the other party with this information and see if they are willing to budge.
Never feel pressured to sign a contract with the terms exactly as is. See where you can push for concessions and advocate for yourself! During negotiations, you may also realize that you do not want to sign the contract at all – this could save you a lot of time and money in the end! If a company or individual is truly looking for your partnership, they will allow room for negotiation or agree to your requests.
5. Pay Close Attention to Termination Clauses
As previously mentioned, getting out of a contract is usually much harder than entering one. Although you need to pay attention to all details in a contract, you’ll want to accurately review any clauses surrounding the end or early termination of a contract. For example, some contracts may charge a penalty if you choose to end your contract before the agreed upon end date. Other contracts may automatically renew on a certain date. Termination clauses are crucial because this also determines what legal recourse you have access to if you or the other party want to end the contract.
Most times, a “cooling off” period is granted to a person signing a contract. This refers to a short period of time usually granted to a person after signing a contract to consider their decision. If you change your mind within this period, you can usually end the contract without penalty. However, each province or territory may have different allotted periods of time, so it is important to reference the Consumer Protection Act. The limitation period in Ontario will also vary depending on the type of contract you have signed. For more information, visit https://www.ontario.ca/page/your-rights-under-consumer-protection-act.
6. Seek Independent Legal Advice
Contracts can quickly become overwhelming and convoluted if you are not familiar with legal terminology. If you find yourself in this type of situation, it is advised that you seek independent legal advice. A licensed paralegal or lawyer will be able to review the contract and let you know of any concerns you should be aware of. They will also be able to make recommendations and explain any legal ramifications you may be exposing yourself to.
This may cost you money upfront, but it could also save you a lot more by being fully informed about a contract. Having a legal professional review your contract before signing will also put you at ease and remove the unknown from the experience. Another advantage of having a paralegal or lawyer review the contract is that they will be able to advise on whether certain terms are even legally allowed and enforceable.
7. Read the Entire Contract (Including Fine Print)
Even if you have a paralegal or lawyer review your contract for you, be sure to still read the contract in its entirety. This will help you confirm what you are about to agree to with the other party, and also ask questions for clarification. If the other party promises to remove something from the contract, ask for a fresh copy with the revisions or strike out what is to be removed with the initials of both you and the other party noted.
Reviewing the entire contract also makes you aware of your obligations. Some do not realize that they are also bound by certain rules or that they must perform certain actions based on a contract. You do not want any surprises down the road so be sure to read every single line on every single page. Don’t forget to review the fine print! Sometimes out of habit or time constraint, we skip over the fine print thinking it is meaningless. But remember, the fine print is there for a reason. It is still part of a contract, and if signed, it will still be legally enforceable.
8. Review the Dispute/Arbitration Clauses
If you run into a dispute with the other party, you will want to know what options there are for remediation. Some contracts may specifically state that the only remedy available is to go to an arbitrator and their decision will be binding. Others will allow any remedy available in the court of jurisdiction (Ontario).
Either way, you should be aware of how disagreements will be handled and the timeline for resolution. Understanding the process to file a complaint or advise of a dispute will save you time and stress when you are in the thick of it.
9. Before Deciding…Sleep on it!
Even though you may have a cooling period after signing to change your mind, take advantage of your time beforehand. Once you are sure of the contract and ready to sign, request a day or two to confirm your decision. Use this time to sleep on the contract and make sure you are not agreeing to anything under undue stress. If you feel like you’re making the right decision, you will feel the same way the next day and be ready to sign with a clear mind.
10. Ask for a Signed Copy
Once the contract is officially signed, make sure you get a signed copy for your records. The format of the copy is not as critical as simply making sure you actually have a copy. Having a copy is important so that you can refer back to the agreement at any time and reference it in discussions you may have. In case a dispute arises, you’ll also want to have a copy handy instead of having to rely on memory or the other party’s copy.
Signing a contract does not have to be a daunting task but you could run into issues if you are not informed. These tips will help you protect yourself and your assets before entering into an agreement. Even with these tips, you are still encouraged to seek legal advice before entering into any formal or informal agreements.
If you have questions or concerns regarding drafting or signing a contract, contact Oduraa Legal Services today!
