Contracts: Navigating Between Fairness and Benefit
How do you know when a contract helps you or them, or if it’s fair to both parties?
Here are some key things to consider:
1. Look at the duties assigned in the contract. If one party has the majority of the responsibilities, then the contract is likely written to benefit the other party.
2. Examine the payment terms. If payment is only due after services are rendered, then it’s probably a buyer’s contract. If payment is required upfront, it’s probably a seller’s contract.
3. Be aware of one-sided clauses. Often, contracts drafted by the other party will contain clauses that apply only to you and not to them. For example, you may be required to comply with all laws, while they are not subject to the same requirement. If you encounter such clauses, insist that they be made mutual.
4. Take advantage of one-sided provisions. If the contract is drafted to benefit you and the other party doesn’t request any changes, you have an advantage throughout the contract.
5. Weigh the risks and benefits of one-sided provisions. While it may be tempting to draft a contract that heavily favors you, consider the potential downsides: negotiating the contract may take longer than expected, and the other party may walk away from the deal entirely.
6. Despite what I said in #5, don’t volunteer to make everything mutual in hopes of avoiding all negotiations, because you’d be taking on unnecessary risks. Remember that any breach of the contract can result in legal fees and damages, so only agree to what is necessary and reasonable.
By understanding who benefits from each provision in a contract, you can negotiate a fair agreement that works for both parties.