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Finding – and closing – contract loopholes

Contracts are a part of life for every commercial enterprise, forming the basis for mergers, employment and acquisitions. Virtually everything comes back to a contract in some way, but contracts have a deserved reputation for complexity.

There is no getting around the baked-in intricacy of contracts, but you can save yourself many headaches by closely looking at such items as:

The word “notwithstanding”

The word in and of itself is a signal of exceptions to the rule just laid out. If the contract has exceptions, you should review all aspects of the document to ensure that you are not one of them. If you find yourself listed as an exception to the basic terms, this may be the moment to re-open negotiation.

Terms and conditions

Every contract should have a section devoted to defining the terms used throughout the document. It defines the rights of the parties. If your contract is missing terms and conditions, it cannot act as a contract. If the terms and conditions are unclear or misleading, it can vastly affect your business.

Financial obligations

Your obligations in a contract might force you to take on costs you might have otherwise avoided. A financial obligations clause may make it more expensive if costs of material change or even if there is a breach of contract. You should ensure that the financial obligations of your contract are in line with what was hashed out in negotiations.

Last-minute revisions

Occasionally, things change before signing a contract, which can leave you with some unvetted language or a clause no one discussed. These changes aren’t necessarily bad, but they can include terms that leave you in a challenging position.

Read your contracts. Get a second opinion.

There are many ways that unfavorable terms can get into a contract, but you do not have to sign a contract you don’t like. You have the right to review every word of the document and get a second opinion. To protect yourself, contacting a contract attorney is probably your wisest choice.