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Contracts in Business

Contracts: 5 things to think about Part 1

Contracts: 5 things to think about (Part 1 of 2)

Contracts can be complicated things.  For example, some years ago I used to work on contracts involving PFI (Private Finance Initiative) schemes for schools and hospitals.  The main body of the agreement would be over 100 pages long.  But that was only the start of it.  When it was all put together – with all the specifications, payment mechanisms and all the other related contracts  – it used to come to several large lever-arch files, and even sometimes several storage boxes.  All for one project.

But, complicated as all this was, in way all these contracts came down to a few key points.  They are points – questions – which really every contract needs to deal with. 

Sometimes the answers to these questions end up being quite complicated – on PFI schemes they certainly did – but the questions themselves are really quite simple, and they can be expressed in one short sentence.

  • Who is going to do what, for whom, when and for how much? 
  • To this we might perhaps add a few more questions.  For example, what if it all goes wrong? 
  • What happens if someone doesn’t do what they say they are going to do? 
  • When you’re thinking about a contract (i.e. about entering one) it’s always a good idea to keep an eye on the why too.  Why are we doing this, and will this get us to where we want to be?

But, even if there are sometimes other questions to consider too, the who, the what, the for whom, the when and the how much, are always key.

In this post I want to say something about who, and why it is important.  In a second post I’ll come to the what, the for whom, the when and the how much, and why they are important too. 

  • Who?  If you are the buyer, who are you dealing with?
  • Will they be able to do what they are promising to do for you? 
  • Will they have the funds to do it? 
  • Might they go bust before finishing it? 
  • Might they be distracted by other (perhaps to them more important) things?  
  • Conversely, if you are the seller, will these people be able to pay you? 
  • Whether you are the seller or the buyer, are these people you can work with? 

You can have the best contract in the world, but if the other party is wrong, or won’t be able to do what they say they will do, it’s not going to help you.  So think about who you are contracting with (and make sure the contract is clear about this).

What? is obviously key.  If you are buying something – whether it is a bit of kit, or a service of some kind – what is it precisely you are buying?  The contract really needs to set out what this is.  If you don’t, you may end up with something other than what you wanted.   

Contracts: 5 things to think about (Part 2 of 2) – Kerseys Solicitors

If your business needs advice and support, please contact Adrian Chaffey, a specialist Corporate Lawyer in the team at Kerseys Solicitors in Ipswich on tel:01473213311 or Kerseys Solicitors in Colchester on tel:01206584584 or email us at [email protected], alternatively you can visit our web site and click “Call Me Back” and a member of our Commercial team will be happy to contact you.

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