Easy Tips for Reading Contracts When You’re Not a Lawyer

Reading business contracts when you’re not a lawyer can be daunting.  It is often tempting to pass the heavy lifting off to the corporate legal department, and take what your in house counsel says at face value without actually reading the contracts.  However, anyone involved in business contracting, including salespeople, corporate purchasing agents, contract managers, or department heads, should have a basic understanding of how to read business contracts.  Here are a few tips for reading contracts when you’re not a lawyer:

  1. Just read the darn thing. Roman numerals with subsections and terms like ‘force majeure’ can be intimidating at first, but once you start reading, you might be surprised by how much a lay person can read and understand in a standard business contract.  The biggest hurdle is actually convincing yourself that you can tackle the contract.  Additionally, the more you actually read the contracts, the more familiarity you will gain, and the better your understanding will be, which is incredibly useful when negotiating future deals.  Once you become familiar with warranty language, for example, you’ll see variations on the same language from contract to contract.
  2. Ask when you don’t understand. It is perfectly acceptable to ask your attorney what terms mean, or why specific phrases are included in a given contract. Your corporate counsel should be more than happy to explain the basics, if it means that they have less contract review work in the long-run.
    • You’d be surprised. Sometimes, the other side may not even understand him/herself!
  3. Get to know your company’s boilerplate. When you are negotiating contracts, it is very helpful to know what is in your company’s standard form agreement, commonly known “boilerplate” language.  These include things like termination provisions, indemnity clauses and the like.  Again, ask your corporate counsel if you have specific questions or what to know why something is included.
  4. When you get a standard form contract from the other party, mark it up. One of the best ways to read and understand a contract is to pick it apart.  When the other party you are negotiating with drafts the agreement, print a copy out and take a red pen to it, or tab the document with comments in Microsoft Word.  Circle terms or provisions you do not understand, or things that seem more favorable to the other side (and less favorable to your company).  Ask your attorney about why things are written the way they are and how you might revise to bring parity into the contract.

If you are involved in corporate purchasing or sales, or have questions about contracts for your business, attorney Leslie S. Marell can help.  Leslie has more than 25 years of experience as in-house counsel and as a legal adviser working with businesses, business people, and business contracts, in the technology, manufacturing, software, and medical device industries.  She understands the real-world practicalities of what it takes to draft, review, and negotiate corporate contracts, and has presented her dynamic seminars to Fortune 500 companies and small to mid-sized businesses across the country.  Leslie specializes in helping contract analysts, project managers, and department leaders work better with their own internal legal departments and outside counsel.  To learn more about Leslie’s seminars, or get expert advice on contracting matters, contact Leslie at (310) 372-8663, or visit her online.