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Should I have a lawyer review my contract?

Reading time: 6 mins

A contract review is when one party hires a lawyer to review the terms of their contract. Contract review can be somewhat complicated, especially when a contract involves complex issues. A contract lawyer knows what to look for and already understands the exact process to precisely review a contract.

But how exactly can a contract lawyer benefit you with a contract review?

What is a contract lawyer?

A contract lawyer is a lawyer who specialises in contract law. They devotes a large part of their practice to drafting, reviewing and negotiating contracts. These contracts can apply to both businesses and individuals.

Examples of business contracts include:

  • sales contracts, 
  • supplier contracts, 
  • non-disclosure agreements, 
  • partnership agreements, 
  • employment agreements, and 
  • joint venture agreements.

Examples of personal contracts include: 

  • a power of attorney, 
  • residential leases, 
  • commercial leases, and 
  • home purchase agreements.

These lawyers are experienced in the requirements of contracts and know how to ensure that they are enforceable. They know contracts, contract requirements and the laws that apply to contracts in their jurisdictions.

Farrah Motley is an Australian Qualified Lawyer and completed a Bachelor of Laws and Business from QUT

What are the benefits of using a contract lawyer?

Using a contract lawyer can have many benefits for individuals and businesses. Some specific benefits of using a contract lawyer are:

Identifying legal issues early

A contract lawyer has extensive knowledge of contract law. She knows how to interpret the law and what its implications are in practice. By thoroughly reviewing a contract, the contract lawyer can catch legal issues early on. She can then suggest ways to mitigate them.

Example One

Alex, a business owner, resells goods from another person, James, who manufactures the product. They sign a manufacturing agreement that sets out the terms of delivery, liability, payment, and so on. However, the agreement was unclear about James’s obligations to deliver the goods on time. Over time, Alex faced angry customers who did not receive their products on time because James, the manufacturer, did not keep his part of the agreement.

Had Alex hired a contract lawyer to review the manufacturing agreement, she could have caught the problem early. The lawyer then could have suggested the manufacturer’s (James) obligations be clearly spelt out in the contract.

A contract lawyer can also point out things that are missing or should not be in the contract at all.

Example Two

If a party presents you with a contract to sign, it may contain terms that seem unreasonable. Under Australian Consumer Law, there are rules about when a term in a contract is considered ‘unfair’ and can be declared void. In such cases, hiring a contract lawyer to review your contract may save you from future disputes.

Understanding your contract

It’s no secret that legal language is often tough to understand and borderline incomprehensible. Many lawyers make it challenging to understand the contract, which can frustrate anyone.

However, frustrating it may be, you cannot sign a contract without understanding it first. Because signing a contract binds you with certain rights and obligations, and you must do what you have agreed to do. Therefore, you must understand exactly what you sign up for.

Example Three

Alex, a freelancer, is a software developer. His potential client, James, asks him to develop software for him and to sign a contract that includes intellectual property limitations.

The contract states that Alex doesn’t own any intellectual property in the software. Instead, he “assigns” this intellectual property to James.

This can significantly affect Alex’s business. Because often, there is an “existing intellectual property” of the developer of the work he created that he can reuse for future clients.

Alex turns to an online law firm in Australia and takes the help of a contract lawyer to review the contract. The lawyer helps him understand the contracts and suggests renegotiating the IP clause with James.

Sometimes contracts appear simple at first glance. But even seemingly simple contracts contain clauses that are difficult to understand or may have significant legal consequences.

Example Four

You are a freelancer. A potential client asks you to sign a contract with a non-compete clause. This means you won’t be able to work with direct competitors of your potential client in the industry even after the contract is finished.

Agreeing to such a clause can significantly limit your client base. Hiring a contract lawyer in such cases can help you fully understand your contract terms and can save you from harsh consequences.

Fair Contract Negotiations

Contract negotiations are often difficult and heated. Tensions may arise between the parties even before they reach an agreement. A good contract lawyer remains cool and calm in any situation. She knows how to communicate effectively with other parties and get deals for her clients.

A contract lawyer knows the importance of building a strong foundation for long-term relationships. And there is no better time to do this than before signing a contract.

Example Five

Alex is an engineer and has received an offer from his dream company. The company asks him to sign an employment contract for the new job.

Alex hires an online law firm to review his employment contract before he signs it. His contract lawyer familiarizes him with all his obligations during his employment and even after he leaves. The lawyer also checked all the necessary clauses in the employment contract and told him what he should negotiate with his potential employer.

Contract review involves more than just a lawyer telling you what the contract means. A good business lawyer can point out the opportunities that arise from the contractual relationship. She will tell you what you can do to get the best out of this business relationship you are entering into.

Example Six

You are the founder of a technology startup, and your startup is preparing to raise capital. Raising capital can be exciting. You want to make the most of it by negotiating the best deals with investors.

When an investor hands you a term sheet or proposes changes to a shareholders’ agreement, a smart lawyer will help you understand what these documents mean for your startup’s future and whether there is anything more you can do to negotiate a better, mutually- beneficial deal.

Especially because your startup could have the potential to grow significantly in the future, you should make sure that you establish favourable contractual terms from the very beginning so that your interests are protected. And hiring a contract lawyer is the best way to ensure that.

Contact an Australian Business Lawyer Today.

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