I review contracts frequently. It’s part of my job. I’m not a lawyer, but I need to protect my company. I have an understanding, through a finance and accounting basis, that I am obligated to protect. Aside from that, I also feel that businesses have to apply common sense and basic protection with any contract they enter into. As my expertise and knowledge has grown, I have found there are 3 types of mentalities that people fall into when it comes to contracts.
The first is the mentality that if it doesn’t come out and bite you immediately, than it must be ok. These people often get into trouble. They don’t realize that contracts are for protection, and either party is really only trying to protect themselves. So if you aren’t protecting yourself, then you should bend over and take what’s coming to you… The massive late fee increase, the invoicing procedures, the intense deliverables, etc. These are all very basic action items that are commonly missed or taken under a bad interpretation.
The second mentality are the people who quickly rush over the details, and only take from it the main points. It’s often these people that forget the workings of the contract and guess the outcomes later. They can get in just as much trouble as the people who don’t read the contracts at all. Unless you are completely aware of what the contract states, you could be walking on dangerous grounds. If you forget that you signed a contract stating that all invoices must have something peculiar written on them, guess what? You are not getting your money. I’ve seen some companies add ridiculous actions just to make sure that people are reading their contract. They hold no special business practices, they just want to know you are taking them seriously. Honestly, I’m guilty of this myself. It’s a very good way to try and get the other entity at fault for not adhering to the contract and great for later negotiations.
The third category are those that actually read the contacts. Even this level falls into two categories because some people can take the actions of a contract WAY too seriously. Once I saw someone actually hand deliver an invoice because the contract accidentally stated “Hand Delivery Address” when it was suppose to say “Physical Delivery Address.” Fortunately most people fall into the category of actually reading the contracts. Unfortunately, everyone is guilty of falling into the other categories from time to time. *Cough* Enron *Cough*