The execution phase is often an exciting time of the contract administration process. It might mean that you are close to commencing the works relevant to the contract. In any case, you may be tempted to go ahead and sign the contract as quickly as possible. However, it is important that you take time to properly review the "ready for execution" version of the contract before jumping in and signing. In this article, we will discuss reviewing the for execution version of the contract.
Check the Party Contact Details
It might seem obvious, but it's important to check each party's entity details before signing. Review your details and those of the other party entering into the contract to make sure the entity name, ACN, ABN, contact person, address, contact phone number and email is correct. If you need to issue a notice for a breach of contract or termination notice following execution, it's crucial you have the correct details to make such contact.
Similarly, both parties must properly sign the contract. If they do not, you may not be able to enforce the contract at a later date.
Know the Price
To stay afloat, you should budget accordingly. You should therefore ensure that you have obtained verbal confirmation from your counterparty about the key terms, including the price. These terms should be to your commercial advantage.
This in turn ensures you know when you are able to issue a payment claim to ensure prompt payment. You should also know when to expect to receive payment (or any payment schedule disputing the payment claim). This is particularly important for big or longer term contracts. You want to make sure that you are handling any disagreements in relation to fees at the time, rather than issues compounding and resulting in underpayment and/or a dispute.
You should also know when — and for what reasons — you might be able to increase or otherwise modify the price. This in turn may require you to undertake specific notice and processes.
Understand Each Party's Obligations
The contract should set out the scope of works you're providing and your obligations. You should not be expected to provide any incidental, related or secondary services. Make sure that the other party has not included any extra commitments that you have not agreed to when negotiating the contract.
The contract should also place certain obligations on the other party to allow for you to properly provide the works. For example, it's important that you have sufficient site access and time to carry out the works. Be sure to check that there is a mechanism in place to allow for you to claim extensions of time and funds to be able to cover an interruption to the works, which is out of your reasonable control.
Be Conscious of the Termination Provisions
Can either party terminate the contract for any reason? Or, can the parties only terminate the contract for breach? When looking over your contract, you should confirm under which circumstances you or the other party can terminate the contract.
Where you are carrying out the works, ideally the other party can only terminate the contract for breach of contract. However, if you agree to a termination for convenience right, you should check to ensure the other party has to give you sufficient notice ahead of the termination.
Situations may arise which cause you to breach the contract. You should ensure that you have ample time and capacity to fix any breaches before the contract can be terminated.
Finally, it's important that you know what your obligations are to the other side (and vice versa) following any termination of the contract.
It is vital that you have read and understood your obligations, and those of the other side, under the for execution version of the contract. Ensure you know:
- how to submit a payment claim;
- when to expect any payment schedule;
- how and for what reasons you might be able to terminate the contract; and
- what you might be liable for.
If, at any stage, you are unsure of something, reach out to your LegalVision lawyer who is happy to discuss any questions you might have.