A new contract usually lands at a busy moment. A client wants to get started, a supplier has sent its standard terms, or a partner has emailed a draft and asked for it back by Friday. It is tempting to skim it, check the price and sign.
Most of the time that works out. When it does not, the problem is almost always in a clause nobody read closely: an automatic renewal, an uncapped indemnity, a termination right that only runs one way. This article explains what a business contract review lawyer in Sydney and across NSW checks before you sign, and gives you a checklist you can use yourself.
Why Business Contract Review Matters
A contract sets out who carries which risk. Standard terms are almost always drafted to protect the party who wrote them. That is not sinister; it is just how contracts are prepared. But it means that if you sign without asking questions, you may be accepting more risk than you realise.
A review is not about rewriting everything. Often the most useful outcome is a short list of points to raise, a few clauses to tighten and a clear explanation of what you are agreeing to.
What a Business Contract Review Lawyer in Sydney Checks
The parties and the scope
Is the right legal entity named on both sides? Contracts are sometimes signed in a director’s personal name rather than the company’s, or with a business name instead of the entity behind it. The scope of work or supply should be clear enough that both sides would describe it the same way.
Payment and pricing
Check when payment is due, what happens if it is late, whether prices can change during the term, and whether amounts include GST.
Term, renewal and termination
Look for automatic renewal clauses, minimum terms and notice periods. Can you end the contract if things are not working? Can the other side end it at short notice while you are locked in?
Liability, indemnities and insurance
These are the clauses that matter most when something goes wrong. Is your liability capped? Are you indemnifying the other party for things outside your control? Does the contract require insurance you do not currently hold?
Personal guarantees
Directors are sometimes asked to sign a personal guarantee, which can put personal assets at risk if the business cannot pay. These are easy to miss, especially in credit applications and leases.
Intellectual property and confidentiality
Who owns what is created under the contract? Can you reuse your own templates, designs or know-how with other clients? Are confidentiality obligations reasonable and mutual?
Restraints and exclusivity
Some contracts stop you working with competitors, approaching staff or operating in an area for a period afterwards. Make sure any restraint is something your business can live with.
Disputes and governing law
A clear dispute resolution process, such as negotiation followed by mediation, can save a great deal of time and cost. Check which state’s law applies and where any dispute would be heard.
Unfair contract terms
Australian law offers some protection to small businesses against unfair terms in standard form contracts. Whether it applies depends on the type of contract and the businesses involved, so it is worth asking about if you have been handed terms on a take-it-or-leave-it basis.
Business Contract Review Checklist
Print this list or save it and work through it before you sign. If you cannot tick an item confidently, that is a good point to raise or to get advice on.
- ☐ Both parties are correctly named, with ABN or ACN where relevant
- ☐ The goods, services or deliverables are clearly described
- ☐ Price, GST, payment dates and late payment consequences are clear
- ☐ I know whether prices can change during the term, and how
- ☐ I know the start date, end date and any minimum term
- ☐ I have checked for automatic renewal and know the notice period to stop it
- ☐ I can terminate if the other side does not perform, and I understand when they can terminate
- ☐ My liability is capped at a level the business can carry
- ☐ I understand every indemnity I am giving
- ☐ I am not signing a personal guarantee without advice
- ☐ Insurance requirements match the cover we hold
- ☐ Ownership of intellectual property is clear
- ☐ Confidentiality obligations are reasonable
- ☐ Any restraint or exclusivity clause will not limit future work unfairly
- ☐ There is a sensible dispute resolution process
- ☐ The governing law and jurisdiction are acceptable
- ☐ Any documents referred to (terms, policies, schedules) have been provided and read
- ☐ Any promises made in conversation or emails are written into the contract
Risks Business Owners Often Miss
- Incorporated documents. A one-page order form can bring in pages of online terms that can be updated by the other side.
- Verbal promises. If a salesperson promised something, it should be in writing. Many contracts say that only what is written counts.
- Signing authority. Make sure the person signing for the other side has authority to bind them, and that the right people sign for you.
- Variations by email. Contracts often set out how they can be changed. Informal changes may not be effective.
When to Get a Lawyer Involved
You do not need a lawyer for every routine purchase order. It is worth getting advice when:
- The contract is high value or long term
- You are asked to give a personal guarantee or a broad indemnity
- It involves your intellectual property, key staff or a restraint
- The other side will not negotiate and you are unsure whether the terms are fair
- Something about it simply does not feel right
The earlier you ask, the easier it is to negotiate. Once a contract is signed, changing it depends on the other side’s goodwill.
Frequently Asked Questions
How long does a contract review take?
It depends on the length and complexity of the document. Let us know your deadline when you send it through so we can tell you what is realistic.
Can you negotiate changes for me?
Yes. We can prepare a list of proposed changes for you to send, or deal with the other side directly if you prefer.
Can you prepare our own standard terms?
Yes. Having your own terms means you start from a document that protects your business. See our contracts and agreements page for more.
Talk to Our Team
If you have a contract on your desk and want a second set of eyes before you sign, our commercial and corporate law team can help. We are based in Manly and work with businesses across Sydney. Contact us or call 02 9977 1133.
This article is general information only and is not legal advice. Please speak with a solicitor about your circumstances.