Five Things to Consider Before Signing a Contract

Ours is a world full of contractual transactions. Every day countless contracts are formed, and most consumers know little about their contractual rights. Here are five things you should consider prior to signing a contract:

1. Read the Contract

It will probably come as no surprise that most people—according to one survey, as many as 90%—agree to be bound to terms they have not read. But there is no requirement that a contract be read to be enforceable. In other words, it is not a defense to a breach-of-contract action to say that you did not read the contract.

A contract is not enforceable if both parties are not giving something or giving something up, so it’s a sure bet that if you’re signing something, you’re also agreeing to give something up. The surest way to prevent the kind of angst associated with being bound to something you didn’t realize you agreed to is to read the contract before you sign it.

2. Feel Free to Negotiate

Not all contracts are negotiable. Those that are not are called adhesion contracts. They form the majority of contracts, including when you purchase anything online—and they’re usually enforceable. But just because a contract does not look negotiable does not mean there is not room to negotiate.

A rental lease agreement, for example, typically comes in a preprinted form that leaves little doubt as to what the terms are intended to be, and they’re exactly what the landlord wants them to be. But because you have leverage (meaning the landlord wants a tenant as much as you want a place to live), you likely also have negotiating power. So if there is a term you don’t like (which you’ll only know if you read the contract), ask for it to be changed. You may be surprised how often the other party will agree to it.

3. Have an Attorney Review It

Retaining an attorney to review a contract may not always be necessary, but if it is an agreement for a large transaction (like the purchase of a home) or with extended duration (like an employment or nondisclosure agreement), an attorney’s advice can become a valuable investment that could save you in the long run, particularly if you are dealing with a party you don’t know is trying to take advantage of you. Contract review is typically not very expensive, and depending on the circumstances, it can more than pay for itself.

4. Realize that No Signature Is Actually Needed

Contractual acceptance is a very broadly defined term in contract law. You don’t have to sign with your exact signature, your name, or even sign at all to enter into a binding agreement. Almost any mark or sign made for the purposes of acceptance of the contract’s terms will suffice. Most online transactions do not involve a signature, but a click, known as a “click-through” agreement. Click-through agreements can be enforced even though there is no signature.

5. Get a Copy of the Agreement

If you are entering an agreement, you have a right to a copy of it. If the person with whom you are transacting business refuses to give you a copy, that should be cause for alarm. Insist on a copy and then keep it for your records. If you are accused of having breached the agreement in the future, it will save you a lot of time and anxiety if you have it for your reference. And if the disagreement turns to litigation, you will want to give a copy to your attorney immediately.

 

Zachariah B. Parry is an attorney and founding partner at the law firm Parry & Pfau and is an adjunct professor who teaches torts, contracts, and Nevada practice and procedure for UNLV’s paralegal program. He can be reached at 702-912-4451 or zach@p2lawyers.com.