Top 5 Tips for Reading a Business Contract

Are you planning to launch a business? To begin with, ensuring that you are clear about the legal formalities for small businesses. Then there is one other talent to acquire and that is the ability to read and understand business contracts. Most contracts are verbose but every word in it should be clearly interpreted so as to understand any pitfalls and loopholes to be avoided.

Start with the easiest part

There are certain common statements and sections in the contract that would be similar to the contents of most other contracts. Starting with such basic clauses would make the work simpler. And in this step, also make it a point to read more and understand the terms that would be used in the contract, the legalese.

Draft before the final one

Even before you sit to sign the final contract obtain a draft copy. Also, buy some time for yourself so as to sit and thoroughly read through the contract. On a draft copy, you have the freedom to scribble, take notes, mark the ambiguous statements and the portions where you need more clarity.

It is always good to obtain a third pair of eyes

The issuing party would have already created the contract and you would have read the terms. But when you get a third person to read the contract you would also get a fresh perspective. It might help you capture the points that you might have possibly missed out.

Be clear about the scope

You should be clear about what is covered and what isn’t covered in the contract. Some contracts are so critical that they can even affect the operation of the business itself. So hiring a lawyer to assist you with understanding business contracts is a good idea.

Verbal promises are not good for businesses

Drafts could be revised any number of times. So always get the changes done in the written contract and do not accept verbal agreements even for the smallest and seemingly less important points.