Contracts play a critical role in every business and are the key to ensuring that your risk is minimised should your customer refuse or become unable to pay for the goods and services you’ve provided. If you need to recover money owed to you or your business, watertight contracts are the best starting point, no matter the circumstances later down the line.
When you’re entering a new contract, this is what you need to consider
Relationship – have you carried out due diligence and are you happy you can deal with the other party for the contract term?
Whose terms and conditions apply? When contracting, ensure that your terms apply. Send your terms and conditions with every document.
Awareness – make sure that your terms and conditions are brought to the other party’s attention to avoid arguments later.
Payment terms – make sure that payment terms are clear and specify when payment shall be made.
Signature – make sure that the contract is duly approved and signed.
Put it in writing – a written contract is easier to enforce at a later date rather than relying on an unwritten agreement.
Parties – make sure that the contracting parties are correct and properly identified.
Speak to our commercial team – we’ll ensure your contracts are fit for you and your business, safeguard your income and protect you, and your assets, from claims.
Common contract traps to avoid
When you’re owed money, hindsight can be a wonderful thing, but having the foresight to contract properly in the first place is even better. In our experience of recovering debt for hundreds of businesses and individuals, avoiding these common contract traps helps build a stronger case against the debtor.
Exclusion clauses – make sure you understand the limits on your right to be paid.
Recovery of costs – make sure that the contract provides for recovery of costs as a contractual right in case you need to spend money to recover the contractual debt.
Jurisdiction – is the contract subject to the law of England and Wales, or other jurisdictions? Make sure you’re in the know. Our international team can help.
Payment terms and the right of termination – is the contract clear on this? Do you have the right to terminate and demand full payment?
Entire agreement and variation– can the contract be varied by conduct? Make sure that everything is covered by the contract, with any variation added in writing and agreed between the parties.
Service provision – if you need to sue to obtain payment, where must the documents be served?
Supersede clause – does the contract include this to make sure that your terms and conditions apply?