Benefits of Working With a Lawyer to Review Your Company Contract in England and Wales

The signing of commercial contracts is the bread and butter of business life.  Your business is likely to enter into multiple agreements with various companies, whether for sale, purchase or supply each year.  Because of this, you will want the process to be smooth and it may be beneficial to have a lawyer assist with your business contracts and legal documents. This article will explain the benefits of working with a lawyer to review your company contract on England and Wales. Keep in mind that in this article, we will treat the phrase ‘company contract’ as a contract between your business and another company, rather than other documents (like employment contracts). 

Do I Have to Have a Lawyer to Review and Negotiate My Company Contracts?

The short answer is ‘no’. The long answer is ‘no, but it is a good idea to have a lawyer involved at some point to ensure your business is not being ripped off’.

A common way to phrase the difference between a business owner acting alone against being represented by a lawyer is the ‘football example’.  The manager of a football team is akin to a business owner.  They know the club’s aims and what they need to try and achieve in the next few weeks and months.  This will involve scoring goals.  The manager will be able to eloquently describe how goals are scored and how many he wants but, aside from the odd (rare) player-manager, will not be best advised to pop onto the pitch and attempt to score himself.  

Instead, the manager is likely to purchase the services of a striker.  The striker has extensive experience converting the manager’s tactics into putting the ball into the net and achieving results.  This will be because they do it week in and week out under (over time) different clubs and different managers.  This is the lawyer.  The advice, negotiation and drafting required with company contracts will be second nature.

Why Is the Advice of a Lawyer So Important?

A lawyer can be helpful just by confirming which clauses in a draft contract are normal and which are not.  This knowledge alone can avoid your business entering into an unfair, misbalanced agreement.

Whether your lawyer drafts a contract for your approval (to send to the other party) or simply reviews a contract received from another company, they will quickly give you a view of how ‘reasonable’ and ‘balanced’ it is. 

Most company contracts contain complex clauses, many of which include a fair amount of so-called ‘legalise’.  A lawyer will be able to drill down into what the clauses mean for your business in practice and whether any of those could legitimately pose a financial or legal risk to your business down the line.

Put generally, the starting point for any lawyer is to ensure that legal agreements and new contracts are agreed upon in a way that protects the best interests of your business. This includes reviewing notice periods, payment terms and other obligations placed upon your business with any company contract.

How Could Your Business Be Stung Without Legal Advice?

Let us say that your business wishes to enter into a contract with another company to supply them with 50 laptops per month.  You agree that your business should receive £400 per laptop.  The company you are dealing with sends you a draft contract by email.  You wonder whether to obtain a contract review from a lawyer or not, as you appreciate it is a form of expense.

As our example, we will say that you do not obtain legal advice from a lawyer.  Unfortunately, a couple of months down the line you realise that the contract is not drafted in your favour because:

1. the other company have included a confusingly phrased ‘time is of the essense’ clause they state means that, upon last month’s shipment of laptops arriving two days late, they don’t have to pay for them but can keep the laptops;
2. the other party have commented that they have the right to terminate the contract upon any breach, however minor, under a particular clause (when ordinarily a lawyer would ensure that an agreement could only be terminated upon a ‘material’ (i.e. serious) breach); and
3. the other company argues that the payment clause’s literal definition means that they pay for the laptops 12 months in arrears (i.e. one year after receipt) rather than straight away, which puts your business in financial difficulties.

Key Takeaways

While using a lawyer is not mandatory, obtaining legal advice on company contracts can ensure that the legal document does what your business wishes it to do and avoids any nasty surprises.

If you need help with a company contract, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents 0808 196 8584 or visit our membership page.

Frequently Asked Questions

Is there anything a lawyer will not do as part of a contract review process?

Aside from not being able to sign the document on your behalf, a lawyer can be engaged in pretty much every step of the process.

Why do contracts tend to be so lengthy and wordy?

This is usually because contract terms need to be sufficiently detailed to ensure the parties understand their obligations to each other.  If not, a Judge may consider holding the clause to be void within any future legal action for lack of certainty.