Introduction
An efficient and effective contract review process is essential for creating and maintaining successful business relationships.
But what’s it all about?
It all starts here: if you sign something, you are responsible for upholding its terms, in their entirety.
So any signed contract, agreement or terms and conditions can have significant implications for the future of your business, and the nature of the relationships with your customers.
Once an agreement is signed, both parties are legally bound. So it’s critical to ensure that its terms are clearly and accurately written, and that you understand what they are!
So whether it’s an NDA or a DPA, contract review checklist is an absolute must-have to ensure that:
a) you know what you’re signing
b) you’re legally covered
c) you’ve got the procedures in place to keep signing customers so you can grow your business!
So you’d better stay with us because we’ve got the ultimate, 7 step, last contract checklist you’ll ever need!
What is contract review
Contract review is the process in which you read, understand and revise your contracts to meet the requirements of the negotiation and business relationship at hand.
Some companies present contracts expecting them to be signed without question. But in most cases, the terms of a B2B contract are negotiable.
If your customers are seeking to negotiate the terms of your contracts – it’s all about balancing the need to protect your business’s interests, with the objective at hand: to close the deal and get the customer signed up!
Don’t fall into the trap of thinking that just because you can add more to protect yourself in the way of provisions, that means you should.
Be really honest with yourself about whether a particular risk is something you absolutely need to shift onto the client or not.
The aim of business contract review is to agree a framework for a long-lasting and mutually beneficial working relationship. And get new customers signed!
How to Review a Contract
You need to ensure that everything stated in the document is clear and accurate, and that you’re comfortable moving forward with the terms as written.
If not, you need to identify and make the necessary revisions before getting locked into an agreement.
The terms of the contract need to be carefully analyzed, all critical missing terms inserted and unfavorable terms revised or removed altogether.
If any errors or discrepancies are discovered, or any questions arise as a result of the contract review, you should not move forward with the negotiation until all issues have been resolved!
Once the contract is signed, you’ll be hard-pressed to have it changed – so you’ve got to identify, assess and revise the terms as necessary during the course of the contract review process.
Bottom line: Make sure that you’re happy with what you’re signing!
How long does it take to review a contract?
It can take anywhere from a few hours to several days to review a contract.
The contract review process depends on the contract at hand and the entire process from initial review to final execution can take anywhere from four to eight weeks.
For instance, reviewing a straightforward contract with boilerplate language that your business uses routinely, can vary enormously from the process of complex, bespoke business contract reviews.
Factors affecting the timeline include:
-contract length
-nature of the service being provided
-complexity of the terms
-boilerplate versus bespoke language
-relationship between the contracting parties
What is a Contract Review Checklist
When you’ve got a contract to review, you’re going to be in a better position if you start with a plan. Enter the contract review checklist!
A contract review checklist is a comprehensive list of the key components you need to examine before signing a contract.
It is a step by step guide you can follow to make sure you’ve covered the most important issues in your contract review (and an invaluable tool if you intend on signing a contract without assistance.)
Every line in your contract matters – but some areas carry more weight than others.
What’s important for your business will vary based on your industry, contract type and the relationship between the parties.
But there are a few terms and principles that are universal across contract types and industries that you need to pay close attention to.
7 Step Contract Review Checklist
Here is our ultimate 7 step contract review checklist:
1. Initial review
So you’ve got the contract in front of you. Where do you even start?
Read the entire contract, any attachments, exhibits, schedules and any other connected documents and information.
Any external documents referenced within the contract are as important to read as thoroughly as the contract itself. Because by signing the contract you become legally bound to the terms of these tied documents.
Make sure that all separate attachments are incorporated into the contract by way of reference.
2. Names, dates & values
It’s fundamental to ensure that the contract contains the correct names of all contracting parties and that the dates and prices align with your understanding of the agreement.
You can’t perform the contract, or track the performance of your counterparty, unless you know the contract timeline.
Make sure you know:
- What is the effective date?
- When does the contract expire?
- What are the renewal terms?
- Is there an automatic renewal provision?
(More on renewal terms later!)
3. Unambiguous Language
A term in a contract is ambiguous “if it is reasonably susceptible to more than one interpretation or construction.”
Pay very close attention to how each sentence is worded and look for language that is unclear, or could be open to interpretation.
Unambiguous language could cause problems later, as the terms could be interpreted differently to the expectation you had when you signed the contract.
Even if both parties interpret the unclear terms the same way, it’s best to revise the language precisely and beyond doubt, in order to prevent conflicts later.
Be sure all terms are laid out explicitly and that both parties’ obligations are accurately described.
4. No Blank Spaces
Contract templates typically include a large number of blank spaces to be filled in with the specific details of the agreement.
Pay special attention that all blank spaces are either filled in or removed before the final version is signed.
Failing to fill in a blank space in your agreement could have the potential to lead to undesired consequences later on!
5. Jurisdiction
Trust me – this is a big one!
If the parties reside in different locations, make sure that legal jurisdiction has been allocated in a clear location that’s agreed upon by both sides.
It may seem like an insignificant clause in a contract. But it’s actually pretty important!
Without an effective jurisdiction clause, the venue will be decided by referring to national or international rules. This could result in extra unforeseen costs and significant additional time spent on getting a resolution.
6. Termination & Renewal Terms
A contract’s termination and renewal terms are absolutely critical.
You don’t want to commit to an agreement until you understand the length of your obligations.
- Termination: your customer’s right to end the agreement and a statement of what will happen if they do.
- Renewal: a statement that the contract will renew unless you and your customer terminate, and a description of the process of auto-renewal.
During your contract review process make sure to include an Automatic Renewal clause, i.e. that the agreement will automatically renew if your customer does not terminate the contract before a specified date.
It’s a term that’s often missing but has become the market standard.
Ask yourself if clear conditions are laid out for termination. The termination clause should clearly specify which events terminate the agreement, how and when.
7. Breach & Default
Make sure you know the potential ramifications of not fulfilling your obligations – or the options available to you if your customers breach the agreement.
While both parties typically have good intentions when entering into a contract, it’s always a possibility that one side won’t deliver according to the terms of the agreement.
You need to know the worst-case scenario if you or your customers were to default, how you can shift the liability and what actions will need to be taken if a default were to occur.
The contract also needs to be clear on what each side is entitled to in the circumstances of a breach, and who is to pay the legal fees.
Who conducts contract reviews?
Option 1: Do it yourself
Analyzing an entire contract with painstaking attention to detail can be incredibly time consuming.
Contract review for non lawyers is certainly a cheaper option, but it’s incredibly time consuming – and time is money!
Not to mention, contract review for non lawyers is an incredibly risky approach, given that no matter how intelligent, experienced and business savvy you are – without legal training there’s always going to be stuff you could miss!
For the average business owner, the language and level of detail in a contract can be mumbo jumbo legalese that leaves you totally confused, and at a potential disadvantage in your negotiations.
And it could be years before you even find out what kind of legal risks you opened yourself up to!
Option 2: Hire a contract review attorney
This is certainly one way to guarantee you’ll be legally covered and protect your level of risk. But at what cost?!
Not only do contract review attorneys charge upwards of $1,000 an hour – but the chances of losing new customers during the process of a long, drawn out negotiation is high!
Don’t we all hate those “just checking on the ETA on the contract review” emails!
It’s up to you to decide if it’s worth the cost of a contract review attorney (and the cost of endless rounds of negotiation as a result of waiting for endless iterations of the contract between lawyers.)
Option 3: Hire in-house counsel
Again, you’ll be legally covered. But employing an additional member of staff full-time for the sake of contract review is an expensive solution!
But there’s another option – a contract review service!
At Superlegal, we’ve taken the best of all three options with none of the downsides.
Let’s get into what AI contract review software is all about.
AI contract review software
Contracts are complex and sensitive in nature, one small error or oversight can have detrimental effects on a company.
Conducting a thorough, line-by-line analysis of a written document is a challenge tailor made to suit modern technology solutions.
Benefits of automated contract review
Aside from the obvious benefit of saving up to 90% on legal fees with flat fee contract review, AI contract review is superior in all of the following ways:
1. Manage and reduce your legal risk
Reviewing a contract can be pretty stressful, taking into consideration the risks involved!
Imagine a world where you’re able to future-proof and mitigate risk by ensuring accuracy and consistency across your contracts, without paying tens of thousands of dollars on legal fees.
That world can become a reality with a legal contract review service!
Automated contract review marks up missing clauses and uses its “eagle eye” to spot all the clauses that matter. Superlegal’s AI has reviewed over 10,000 contracts, spotting issues faster and better than your lawyer!
2. Save a Ton of Time!
Automated solutions don’t just perform faster, they reduce turnaround time from days to the same-day!
A fully automated legal contract review service can reduce contract review time by up to 80%. Unlike a manual review process, which is lengthy and expensive, an AI contract review solution can now take no longer than a few hours.
With Superlegal you’ll get your contracts back in just 24 hours!
So you can save hours of precious time and get back to growing your business!
3. Guarantee Quality, Accuracy & Consistency every time
AI contract review also ensures consistency, quality, and accuracy.
Hours of work and tiredness that invariably affect manual review will never stand in the way of quality or consistency again with an AI contract review solution!
Superlegal’s contract review software never sleeps, and it’ll help you be responsive to your customers, whether they’re based in New York, New Zealand, Los Angeles or London.
4. Get deals done better with data driven, market-based contract reviews
Instead of thinking of contract negotiation as one party “wins” and the other “loses,” the best negotiations are a collaborative effort to get the deal done. Not to mention that it’s in your long term interest to ensure your customers’ needs are met from the outset.
The market standard will determine what is expected in your industry, what is fair for both parties and what is most likely to be agreed on.
Superlegal’s data-driven contract review software aligns with market standards to review contracts in a way that reflects the expectations currently within your industry for an entirely commercial contract review.
Superlegal
Superlegal’s contract review service harnesses the power of AI, verified by top legal professionals to provide unparalleled contract reviews, getting deals done faster, better and cheaper!
Our 24 hour turnaround, and smarter data-driven negotiation provide better experiences to all parties, leading to higher close rates and a shorter deal cycle – every single time.
Make your contract review process easier, faster & better with Superlegal.
Click here to try Superlegal for free!
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