Five Things To Look For in Your Next Contract

What’s the cost of a poorly written contract? Millions, potentially.

Rob Hassett of Hassett Law Group in Atlanta represents clients in music and television. He’s seen contract offers that give a record label or a television show exclusive rights to an artist’s services for upwards of 10 years—often at onerous terms. “I have to tell them: If you sign that, it won’t necessarily work out great,” he says.

Most of Hassett’s clients listen, but some are simply eager to get a deal. A famous local example—not Hassett’s client—is TLC, who sold millions of records and became one the best-selling pop groups of all time. Yet they declared bankruptcy at the height of their success due to a bad contract—one their attorney apparently advised them not to sign.

Contract management is the cornerstone on which any sound business relationship is built. Whether it’s individuals, startups, or established businesses, you shouldn’t rely on a generic template; instead, the contract’s terms need to be tailored to your specific needs. “The goal is to write a contract that is optimal for the client,” says Hassett. “It should be clear and thorough and enforceable. It’s all art—there’s nothing scientific about it. You have to use judgment.”

Here are five things to look for in your next contract, whether business, employment, or real estate-related.

First: Use Plain English

“The parties need to understand and not be confused by legal jargon,” says Danielle Hudson Laughlin at Hudson Legal in Sugar Hill.

A good lawyer, she adds, will avoid “archaic language” and lack of clarity—the hereinafters, wherefores, and such.

“Try to break down sentence structure, so there are not a lot of compound sentences. Clarity is about what is and is not included, so don’t be overly inclusive. Pinpoint exactly what the parties are bargaining for.”

Second: Set Clear Objectives and Deliverables

“Most contracts involve an exchange for money, so typically that is the primary objective, but that is not always the real underlying relationship,” Laughlin says.

A software company, for example, may be developing new components for an existing platform, so “the objective is a working product at the end of the relationship, as opposed to the company receiving $10 million for that code.”

Overall, she adds, “It’s easier for the business to resolve a conflict with the customer if you can go back to the language of the contract and say, ‘This was our objective.’” And while there are two ways to record a contract—orally or through writing—it’s best to have it written down.

Third: Get Expert Knowledge

If your lawyer doesn’t have the relevant know-how or access to the industry, be sure an expert is enlisted to help.

“Any contract with an insurance provision, I want the insurance carrier’s agent to look at those provisions,” says John J. Scroggin, who does tax, estate planning, and business representation at his eponymous firm in Roswell. “I want whoever the expert is to be part of the discussion.”

Similarly, if your contract needs to hold in another state, be sure your attorney knows the laws there—or finds an attorney in that state to check the contract. “It’s even more extreme if it’s outside the United States,” he adds.

Fourth: Pay Attention to Force Majeure Clauses

French for “superior force,” force majeure is a standard contract clause that protects parties from uncontrollable events that interfere with normal business practices—such as a natural disaster or global pandemic. COVID-19 certainly put this clause in the spotlight.

In entertainment, for example, “What will the client do if they can’t have a live performance?” Hassett says. “And you want to make sure they don’t have to do a performance if it endangers their health.”

Fifth: Don’t Rush the Contract Lifecycle

Finally, don’t rush yourself when reviewing the new contract carefully.

“I have learned over 41 years that when you do a review, make your points by redlining or in notes, then put it aside and come back later,” Scroggin says. “I’m looking at a 55-page lease today, and after 30 pages, your mind gets addled a bit. The second or third time, you are more involved.”

Find an Experienced Contract Law Attorney

If you are in the early stages of a business partnership or deal of any kind that involves a contractual agreement and you have questions about specific provisions, risk management, enforceability, or any other matter, don’t hesitate to use the Super Lawyers directory to find an experienced contract lawyer in your area.