Written by Sam Mollaei, Attorney at Mollaei Law
What is Contract Review?
Contract review is the process of reading and understanding a contract on a line-by-line basis. It is a deep analysis process to make sure the contract is fair.
More importantly, you need to make sure it doesn’t include any loopholes that could work against you. Truthfully, contract review is a long process with a lot of legal terminology mixed in. This is why contract review lawyers exist.
A contract review lawyer can examine the contract, explain the contract to you, and even suggest changes that are in your best interest.
Contract Review Mistakes
The unfortunate truth is business owners make all sorts of mistakes when dealing with signing a contract. Some of these mistakes include:
- Thinking a legal review lawyer is a waste of money
- Thinking a contract is non-negotiable or that signing is mandatory
- Signing a contract before reviewing it
- Signing a contract before fully understanding it
Any of these mistakes above can cause you to sign a contract which is not truly in your best interest.
Why Get a Contract Reviewed?
Getting a contract reviewed is important because all of your decisions are made through a contract. Contracts should always be handled in the correct manner to prevent yourself from having a legal problem.
Basically, this means every single contract drafted and negotiated needs to be reviewed by a contract lawyer before it gets signed.
In fact, here are a few key reasons why you should get all contracts reviewed:
- It prevents people from misunderstanding what they are signing. All terms need to be clear.
- It guarantees that the terms within the contract are legal and lawful.
- It prevents – or at least minimizes – future legal problems.
Why is Contract Review Important?
Contract review is about more than just protecting your company from signing a troublesome contract. It is also about protecting the relationship between you and the other parties involved. The relationship is going to be doomed to fail if all parties do not understand the contract.
You enter into contracts every day and all of the time.
Terms of any contract need to be fair, correctly drafted, and thoroughly reviewed. It is vital to make sure the contract meets the needs of both parties involved.
Contract Review Process
Contract review is basically a four-stop process. These steps include:
- Drafting
- Reviewing
- Negotiating
- Signing
First, a contract is created.
Second, the contract is reviewed.
Third, you negotiate any changes you want to make to the contract.
Finally, once everyone is happy and the terms are crystal clear, you sign the contract. Sticking to this four-step plan is the key to preventing yourself from signing a contract that isn’t in your best interest.
What Does a Contract Review Lawyer Do?
A contract review lawyer works with contracts. They can create them, revise them, review them, help you understand them, and help you negotiate the terms of any contract.
A contract is basically a legally binding agreement between you and another party. Contracts tend to pop up in both business and personal manners.
Considering a contract is a legally binding piece of paperwork, it is vital to make sure they are done the right way. This alone is the biggest reason why you need a contract attorney.
Now, I know what you are thinking – what on earth is a contract attorney? Truthfully, there is a specific lawyer for just about every legal task you can think of.
A contract lawyer – as the name implies – is a lawyer who specializes in contracts. This is someone who has experience in both creating and revising contracts.
If you are a landlord, a contract lawyer is who would help you create the lease for your tenants.
If you were a singer, your contract lawyer would help you draw up contracts for your career.
If you were an employer, this is the person who would help you draw up the contracts for your employees to sign.
And so on and so forth.
Naturally, the job of a contract attorney works both ways. Say you are someone who is getting ready to sign a big contract for a new job, a contract lawyer could look at the contract. They can explain it to you in a way that you will understand, and then they will help you make any necessary revisions.
Having a contract lawyer on your side before you create or sign any contract is a good idea because you could be created or signing something you wouldn’t normally agree to.
What Are the Different Types of Contract That Should Be Reviewed?
There are many different types of contracts that you should have reviewed before signing anything. Some of the most common types include employment contract, physician employment contract, real estate contract, purchase agreements, and freelancing contracts.
Let’s look at these common types of legal documents in more detail:
Employment Contracts
An employment contract is something that you’ll have any time you are getting ready to start a new job, a new position, or a new contract.
There are many things to look for in an employment contract, and I’ve covered that in more detail below, but the most important thing to remember is don’t sign anything you aren’t 100% clear on.
Physician Employment Contracts
A physician employment contract is just like an employment contract except it’s for physicians. The general employment contract review advice applies to physician contract as well.
However, there’s one important thing for you to remember as a physician: you are literally dealing with people’s lives and you need to minimize any risk or confusion – get a contract review to make sure you are getting a fair offer that doesn’t jeopardize your career.
You should get your physician employment contract reviewed if you’re a physician.
Real Estate Contracts
Real estate contracts are documents that you need to sign when you are leasing or purchasing real estate. These are usually pretty standard, but it is important to have a lawyer review these contracts because they often involve a major purchase.
Your contract review lawyer will review: mortgage loan documents, plot of land survey, title, title insurance, deed, bill of sale, and the legal description of the property.
Purchase Agreements
Purchase agreements are used to transfer property from one person to another. This may be real estate, vehicles, or any other tangible asset.
Just like with the real estate contract review, your contract review analysis will include any necessary titles, insurance, deeds, loan documents, and the bill of sale.
Freelancing Contracts
If you are a freelancer working by a contract basis, you may need a contract review for larger contracts.
It doesn’t make sense to pay for a review for contracts that don’t offer much money, but larger contracts or contracts that will be used often should be reviewed.
Your freelance or entrepreneur contract should include: the scope of the work, the ownership of the work, revisions, deadlines, payment amounts, and termination specifications.