Watertight Business Contracts: 6 Things to Check Before You Sign

Six things: the parties and signing authority, the scope of work and delivery, price, payment and tax, the term and termination rights, liability and penalties, and how disputes will be resolved. Most problems come from signing a loosely drafted contract that is then read two different ways.

Because you need to know whether the counterparty is an individual or a legal entity, and whether the person signing actually has authority — for instance whether they are an authorised director under the company affidavit. If they do not, the contract may be in difficulty from the start.

It should state what is to be done, in what quantity, to what quality, and on what basis delivery and acceptance are judged. That is what prevents the most common argument of all: whether the work is finished.

It decides where a problem ends up — which court, or whether mediation or arbitration applies, and which law governs. Agreeing that while there is still no dispute produces a much clearer path than arguing about it once there is one.

State clearly what happens on breach, what penalty or damages apply, and how far liability extends. Those clauses are what allocate the risk between the parties when something actually goes wrong.