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It’s a long, hard battle to get a proposal or bid through the acceptance process and a draft contract on hand.  You want the business – you NEED the business – and it is only a signature away.  You reach for your pen and get ready to sign and then that little voice in the back of your head reminds you: “You need to read this before you sign.”  Maybe it should shout rather than whisper: “YOU NEED TO READ THIS BEFORE YOU SIGN.”

You push back … “I’m not a lawyer … what do I know about contracts”?   After all they’re just page after page of small print in some sort of gibberish nobody but another lawyer can understand – right?  What follows is a quick contract survival school on red flags in business to business contracts that won’t make you an expert but will let you know when it’s time to seek help.

First off do a quick scan of the contract and look for the following red flags:

1. Does this appear to be a form contract where the other party has simply downloaded it from the internet and filled in the blanks? If so the contract is probably a one-size-fits-all approach and will be loaded with legalese boilerplate that may or may not be appropriate.
2. Who is the contract actually with? Is their name, address, and contact information available in the contract?
3. Who has authority to issue contractual direction to you? Are they specifically named? 
4. Is the agreement printed in a ridiculously small font – perhaps very densely on some sort of preprinted form?
5. Does the contract contain predominantly exculpatory language designed to shift all or most of the responsibility to you while protecting the other party from any responsibility? In other words is the “agreement” so one sided as to be unfair – if so it’s not an agreementis a “contract of adhesion” which is a fancy way of saying you’re being offered a unconscionable agreement.  It’s not illegal mind you … but it is crafted to deny you certain rights that might otherwise be available or to lead you into a position of weakness that could be exploited later.
6. Is there a clause in the contract that allows for schedule adjustments or other relief in the event of Acts of God (Force Majure)? If it’s not there, it’s time to seek help.
7. Are you being asked to indemnify the other party but no reciprocal indemnity is offered?

That’s just a quick – and not exhaustive list of red flags that should send you to someone who can read and interpret the contract for you and offer advice before signing.  Here are some other red flags to look out for:

1. The other party is unwilling to negotiate terms and conditions of the contract? “Take it or leave it” contracts offend our sense of fair play and good faith. Contracts are legally enforceable agreementsbetween two or more parties. If there is no negotiation or bartering on terms how can one insist they have an agreement?
2. Terms – especially those given special meanings or having special significance – must be clearly defined. So, is “day” a working day or a calendar day?  What do you mean by “commercial best practices” etc.
3. Pay-when-paid.It’s up to you whether you accept pay-when-paid terms (unless the state has specifically prohibited them) but be sure to look at the possible cash-flow implications.
4. The “Complete Contract.” In contract interpretation the usual boundaries are what’s called the ‘four corners’ of the contract.  That means the document(s) that constitute the agreement.  Often times a contract will include a number of other documents as a part of the contract.  These are frequently drawings, specifications, flow down clauses from the government etc. Each of these included documents must be called out in the contract and a copy of these documents included as attachments to the actual contract.  You wouldn’t buy a car without looking under the hood and test driving it – and you should never sign a contract that is missing pages or attachments.

So, what do you do if you have one of these agreements and someone pressuring you to sign?  You tell them: “I need some time to read this over and I’ll get back to you by (when).”  Then you get in touch with a trusted advisor – be that PTAC or a lawyer, or a paralegal who can work on your behalf to clear the land mines and give you a clear path forward.

Remember: it is far easier and better to walk away from a bad deal or agreement than it is to try and remedy it when things go wrong.   It is also pretty safe to assume that if you are being offered a one-sided agreement and being pressured to sign – the other party probably has had experience with agreements gone bad.  That could mean they are protecting themselves from past abuses – but it could also be that they manufacture crises and use such bad agreements to enhance their bottom line.

An hour spent with a specialist looking over an agreement may be the best money you spend all year …