What is it?
Generally, contract is the document that materializes agreement between parties in a transaction. Contract includes some legal, administrative, financial, and tax, and others clauses. Reviewing it through a checklist, gives opportunity to ascertain that liabilities of each side are clearly defined to avoid potential contentious.
The checklist is intended to encourage managers to look more closely and critically at the wording of proposed contracts.
What are the most important checklist points?
- Are the names, type of entities, and addresses of both parties accurately listed?
- Are all important terms clearly defined in the contract?
- Are the payment terms clearly stated with coercion and penalties?
- Are the tax liabilities stated as per the tax law in force in the country, and beyond?
- How are legal compliance issues dealt with?
- How does the contract deal with early termination?
- Are there any provisions specifying how disputes are to be resolved?
- Do the signors have the authority to legally bind their respective entities?
We do it
We are accustomed to contract checklist. By asking oneself key questions regarding an agreement ready to be sign could reveal some breaches. Having it review by an internal or external person, whose interest is not specifically focused on it, could help to eliminate some misunderstanding and interpretation, that could feed some contentious claims.