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When signing a new contract or an updated version of an existing contract, it is essential to fully understand what you are agreeing to. Contracts are present in all areas of our lives, from healthcare to business transactions to employment offers. You may even see a document that does not formally state that it is a “contract” or an “agreement” but provides for a transaction of value, which essentially makes it a contract. Contracts can even verbal, though it is much safer and more reliable for a contract to be in writing. Most contracts are not written with your best interests in mind as they are meant to protect the entity presenting you with the contract and provide the best value possible for that entity. Because of this, it is critical that before signing a contract you consult with your attorney and ask the following important questions. Discussing a contract with an experienced business attorney can help avoid future expensive disputes over a legally binding document that can become problematic.

Questions to Ask an Attorney Before Signing a Contract

Who are the parties to the contract?

In most contracts there are typically two parties involved – the buyer and the seller, the employer and the employee, etc. If there seem to be more than two parties involved in a contract you are about to sign or the parties listed do not match what you are expecting or who you have spoken to, it is wise to consult with a business lawyer. Some contracts will use an individual’s common name instead of the legal name of the company or corporation they represent, which can become problematic down the line. If you are executing a contract on behalf of a business, you want to ensure you are not signing a contract in your individual capacity rather than as an authorized representative of a specific entity. This could leave you personally liable for breaches and/or future disputes.

Does the contract state in detail what I am receiving?

Does the contract detail what you are receiving as part of the service, purchase, or verbal agreement you discussed with the other party or parties involved? An attorney will be able to go over every detail of the contract, including what benefits you will be receiving for signing it. You may expect to receive certain goods, services, or payment in exchange for your goods and services, however if that is not specifically written into the contract in appropriate detail then you could be left high and dry. Your attorney will know if the details included in the contract are sufficiently clear and specific enough to ensure you are receiving exactly what you should be.

Does the contract state in detail what I am expected to provide?

When you sign a contract, you will also be expected to provide certain services, goods, or payment. Your Texas business lawyer will work with you to make sure the contract includes your rights and expected duties as discussed with the other party or parties signing the contract. What you are expected to do and when you are expected to complete that action should be detailed within the contract. A contract that is ambiguous can quickly lead to disputes. A contract attorney can help you identify ambiguous terms and clarify them.

What if I don’t understand the legal terms used in the contract?

Legal terminology can be incredibly difficult to understand. Many contracts use terms that require legal interpretation that a business attorney will be very familiar with. If there are words, phrases, or clauses in a contract that you do not immediately understand or that make the contract unclear, your attorney will be able to clarify things for you. Do not sign a contract that you do not understand just because the language used is complicated or unfamiliar. Take the time to speak to an experienced attorney to fully understand what you are signing because you will be legally obligated to the contractual terms whether you understand them or not.

Does the contract refer to other documents I don’t have in my possession?

Some contracts refer to documentation that you may not have in your possession. An attorney will be able to identify which ancillary documents you may need to read before signing the contract. You do not want to sign a contract without knowing specific information referred to within it that is detailed elsewhere. This could mean you are agreeing to something you cannot fulfill or are paying for something you do not want.

What is the length of the contract and how does the contract terminate?

The majority of contracts will have an end date or only remain active for a designated period of time. Your attorney can explain what that period of time is and discuss if it is appropriate for that particular contract. There may also be clauses within the contract that put into writing under what circumstances and how the contract will terminate. This becomes important in various scenarios, including when one party wants to end the contract early. An experienced business lawyer will review the terms of termination as well as any contract end dates and discuss whether these meet your needs.

What remedies are available to me if the contract is breached?

When signing a contract, most people do so in good faith, meaning they plan to uphold their end of the agreement. This is not always the case, however, as sometimes one or more parties to a contract cannot uphold their end of the deal. This is considered a breach of contract. Potential future breaches are a big reason why a contract should specify what remedies are available to one party if the other party in the event of a breach. Your attorney will be able to review the contract for certain remedies, including the ability to take the other party to court to seek damages or require the breaching party to fulfill their end of the contract.

If there is a dispute over the contract, how will the dispute be resolved?

Even if the contract has not been breached, disputes can arise that need to be resolved. An attorney can review the terms regarding the of handling disputes within the contract with you to make sure you fully understand what to do if complications arise. The contract may state that you are required to go through an arbitration process to attempt to resolve problems before you are able to go to court. It may also specify that you must pay legal fees for the other party in the event of a dispute. Your attorney will point out every dispute remedy to ensure you understand what you are getting into when signing the contract. This information may prove critical in the future.