Before Signing a Contract...


Whenever our firm retains a client that is involved with a breach of contract claim, I always ask the most basic and common-sense question of whether or not my client had read and comprehensively understood the terms and conditions of the contract. Most of the time I get the idea that the complex and often convoluted terms and provisions of a contract were only (i) “generally understood”; or (ii) the contract itself was a “standard one”; or (iii) “I didn’t have the time to read it” excuse. Let me give you some very broad advice. If you care about the well-being of your business and all lingering potential legal liabilities, it is best that you treat each and every contract seriously and with the utmost care. In order to do so, keep the following in mind:

(1) Never do a “general” read through of a contract and assume that you understand everything within. If you have concerns about the contract’s terms and provisions, it is best to contact an attorney that will go through the entire contract with you, step-by-step.

(2) There are rarely such things as “standard contracts,” excluding potentially government contracts. Most companies and businesses that you deal with, will request that they use their own contract forms, arguing that it’s just a “standard one” in the process. The mere fact that they have used such contracts on similar prior transactions, does not conclude that the contract is somehow “standard.”

(3) You ALWAYS have time to read the contract, because the health and success of your business depends on it. Don’t rush, take your time, ask questions, it’s your right to do so.

(4) Remember who you are contracting with. If you are contracting with a large business or company, remember that they have bargaining power and will use that bargaining power to include favorable terms or disclaimers of liability.

(5) Never assume that having a good relationship with the other contracting party, will somehow excuse you from entering into a bad and unfavorable contract. Trust the terms of the contract, not necessarily the party you are dealing with.

(6) Hire an attorney to draft your own version of a “standard contract,” when it is favorable to do so. If you are a business that enters into similar deals in the future, it is extremely favorable to draft a standard contract in which you understand every detail. It will ensure that it is a favorable contract that serves the best interests of your company.

Never take a chance with the language of a contract, all the terms and provisions need to be read thoroughly and most importantly, the legal ramifications need to be fully understood.

Don’t take a chance and if you have trouble, then seek the advice of a business law attorney.

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2600 E Coast Hwy, Suite 225 

Corona Del Mar, CA 92625 

khoney@honeylegal.com949-720-7030

© 2012 The Law Offices of Kalab A. Honey, PC