February Focus:

How To Approach A Contract

Throughout the course of our lives, we are often presented with different types of contracts to sign.  It may be for a job, a residence, a project, insurance, a mortgage or a lease.  The difficulty with these contracts is that they generally include language that we do not encounter on a daily basis and are difficult to understand.  They are usually drafted by the other side and therefore include terms that are more favourable to the person providing the contract, as opposed to the individual receiving the contract.

While most people are reluctant to engage a lawyer to review a contract before it is signed, this is usually a mistake.  A simple meeting with a lawyer can go a long way in saving you money. The lawyer will be able to ensure that your rights are protected and that you fully understand the terms of the contract.  Unfortunately, what often happens is that individuals only engage lawyers when something bad happens.  At this point, it is often too late to do anything of substance.  The most the lawyer can typically do is to make the best situation out of a bad situation, which involves many negotiations, expensive lawyers’ fees, multiple meetings with the other side and potential litigation. 

Steps To Take

If you do not wish to engage a lawyer (given the complexity of the contract or the costs involved), make sure to abide by this simple checklist before signing a contract:

• Always read the contract a few times. Do not gloss over any terms.
• Do not sign the contract unless you fully understand it.It is irrelevant if the other side explains the terms of the contract to you orally (for example, your employer may represent to you that bonuses are paid every year even though the language of the contract states that bonuses are discretionary).Barring exceptional circumstances, oral representations made by the other side are meaningless and the language of the contract will override them.
• Do not sign the contract under stress.The other side may claim that it needs to be signed right away.Do not fall into this trap.Trying to void the contract on the basis that it was signed under immense pressure (legally known as duress) is a very difficult argument to win.