Taking out a contract is easy; all you have to do is sign on the dotted line – literally. However, before you simply dive into the signing process, you need to consider a number of factors beforehand. These factors will determine whether or not the contract suits your needs, if you are able to afford the repayments and if you are comfortable with the terms and conditions.
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Therefore, before jumping onto the next stage, take a step back and consider these five things before taking out your next contract:
Do you know the other party: Be sure to check that the company that you are looking to do business with is licensed to work in your area. Should there be a problem down the line, it is far easier to recoup money or products from registered companies. So check the company’s license and ensure that they are a fully registered company.
Getting out of the contract: Another vitally important aspect of the contract to consider is the ‘opt out’ clause. If you decide six months down the line that the product or service that you subscribed to, no longer suits your needs, are you able to opt out of the contract. When looking for this in the contract, be sure to be aware of any fees attached to opting out and whether or not you are unable to get out of the contract. For instance, most gym contracts lock you in for the specific period and if you decide to resign your membership before that period, you will have to pay an opt out fee along with a portion of the remaining months fees.
What is the warranty period: When looking to enter into a product, ensure that you have a look at the warranty clause in the contract. For instance, if you are purchasing printing for your company, ensure that there is a guarantee of a full refund if the paper is damaged or dirty on arrival. Again, be sure to look for any additions to the clause that prevents you from receiving a full refund or replacement. Remember, it is vital to ensure that the warranty covers the entire duration of the contract.
Payment structure: When signing a contract, both parties need to have a complete understanding of the payment structures. For instance, on what date is the payment due and in what form can the payment be –via debit order, cash or monthly cheque.
Default Clause: Ensure that the contract has a default clause. This default clause will break the contract if one or both parties break the agreement, non-payment or non-performance. This is if the one party is not paying for the services on time or if the delivery of the product or service is not up to scratch.
Before taking out a contract ensure that you check for these five important sections in the contract. Remember, a clear contract structure will ensure that both parties know exactly what is expected of them. Therefore, be sure to understand every single word in the contract and if you are unsure of anything, seek legal advice before signing on the dotted line, it might just say you a ton of money in the long run.
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I am Greg Jones, a lawyer who specialises in business and private contracts. I find that the two common problems people come to me with is debit order switching and cancelling the contract. I cannot stress enough that you need to read and understand every clause in a contract, because unless there is a breach in the contract, what you sign is what you get.
