As Corporate lawyers we are regularly asked to read through and assess various contracts for clients. In today’s busy world most clients only need to know whether or not it is a well-written contract and whether or not it covers everything. However, when evaluating contracts there are many more points we look to cover.
One of the first things to check is whether or not all of the essential terms of the contract are there. Whilst a contract can technically be formed orally in most jurisdictions, a solid contract will specifically list out its essential terms.
One common example is failing to clearly state a valid exchange of consideration. Without a valid exchange of consideration, a contract is not formed. For example, if somebody is to perform a service but there is no obligation stated to pay that person, there is no consideration and therefore, no valid contract.
Groundwork – a solid template
Whilst, when reading through a contract, there appears to be a lot of “padding out content” this can in fact be just as important as the essential terms. Rarely are contracts drafted from scratch. A clear and up to date template helps lay the foundation for any good contract.
Conflict with the law
Another common point to check is an unintentional conflict with existing law. This is most pertinent in contracts relating to highly regulated industries, for example, lease agreements. There are often requirements set out in statutory or regulatory law which either must be included in the contract in order for it to be valid, or prohibited clauses which cannot be included in a contract without invalidating it.
This is not an exhaustive list and there are of course many other elements that go to into a well written contract. However, these are the main points that we check when first writing or reviewing a contract.