If you are a business owner or a potential investor of any business, you will typically be required to enter into contractual agreements with counterparties such as your business partners, the existing shareholders, franchisors, franchisees, suppliers and clients. In a nutshell, business agreements contain the agreed terms and conditions which govern the business relationship between the contracting parties. In this regard, business agreements provide the fundamental basis for cooperation and mutual benefit for the contracting parties.
Given that such agreements create legal obligations on you as well as protect your legal interests, it is therefore important to have such agreements reviewed by someone who is legally-trained, and especially so if the contract which you are asked to sign has been reviewed by a lawyer acting for your counterparty. A lawyer whom you retain to review a contract would look out for terms and conditions which are not favourable to you and suggest amendments to the contract. The lawyer can also explain to you the legal implication of each contractual clause so that you are fully aware of your rights and obligations under the contract. At this juncture, we would highlight that not all contracts are drafted to be fair and equal for both parties, and some may contain clauses that could jeopardise your interests.
If there are any suggestions and/or legal queries, please feel free to contact the author, Waltson Tan, at: waltson.tan@28falconlaw.com
As our law firm specialises in corporate and commercial transactions and disputes, we understand the significance of protecting our clients’ interests from the outset rather than after disputes arise.
We frequently receive client requests to issue letters of demands to their debtors for monies owing, stemming from breaches of contractual agreements.
In our experience, a common thread to these cases is that many of these contracts include clauses which are highly favourable to debtors, leaving our clients at a disadvantage when seeking recourse for breaches. It is also commonly the case that such clients did not have their contracts reviewed by someone who is legal-trained prior to signing.
Whenever we encounter such client requests, the adage that “an ounce of prevention is worth a pound of cure” comes to mind. To engage a law firm to recoup your financial losses through legal means may potentially be more expensive than paying them at the outset to minimise the risk of financial losses caused by signing a contract which is unfavourable to you.
In addition, the preventive path of seeking legal advice prior to signing is more likely to protect the business relationship, as being embroiled in legal disputes would likely cause business relationships to sour.
It is for these reasons that we publish this article – to educate our readers of the implications of signing a legal agreement without seeking the advice of a legal expert.
Our key reasons as to why you should seek legal advice before signing contracts are as follows:
(a) Identify risks: Lawyers have been trained to understand the legal impact of the language used in contracts, and are able to identify potential business, financial and legal risks which are drafted in contracts. By conducting a thorough review, lawyers would be able to spot and flag clauses which expose your business to onerous liabilities or limit your recourse in the event of a breach. With legal guidance, you can take proactive measures to mitigate these risks and safeguard your interests.
(b) Negotiate favourable terms: With a comprehensive understanding of contractual nuances, lawyers are well-placed to negotiate more favourable terms on your behalf. We typically assist our clients by amending onerous clauses, clarifying ambiguous language, and inserting protective provisions. Lawyers are able to value-add by leveraging on their legal expertise to tilt the scales in your favour and fortify your legal position within the contractual framework.
(c) Ensuring compliance and enforcement: Contracts serve as legal frameworks which govern the conduct of the parties involved. Failure to adhere to contractual obligations or overlooking critical compliance requirements may result in legal breaches and disputes in the future. By entrusting experienced lawyers to review your contracts, you can improve compliance with applicable laws and regulations, as well as increase your ability to enforce contractual rights if breaches occur.
(d) Protect long-term interests: In our view, a well-drafted legal contract should not only address our clients’ immediate transactional needs but should also anticipate future contingencies, so as to safeguard their long-term interests. Engaging a legal counsel to review your legal agreements will increase the likelihood that they are robust, adaptable, and conducive to fostering enduring partnerships which would withstand the test of time.
It is imperative for businesses to recognise that the terms incorporated in a contract are legally binding and would significantly impact their rights and obligations. Whilst it may be tempting to expedite the signing process to close deals swiftly and to save on legal fees, overlooking the finer details of a contract could prove costly in the long term.
By investing in contractual review prior to signing, businesses would benefit from being in the position to pre-emptively mitigate risks, optimise outcomes, and fortify their contractual arrangements with counterparties.
Our law firm is ever ready to assist you in navigating the complexities of contract law and safeguarding your legal interests in your business journey.
It often pays to remember that the strength of your contracts is only as good as the diligence you invest in having them drafted. In this regard, we would recommend you to have your legal contracts reviewed by legal counsel prior to signing.
Get in touch with us if you require our assistance to review your commercial contracts.
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Our firm specialises in representing clients on the legal aspects of commercial matters, including advising clients on resolving their commercial disputes.
The author, Waltson Tan, is a corporate lawyer trained in London and Singapore. He is qualified as an advocate and solicitor in Singapore, and has more than eight years of post-qualification experience.
Waltson focuses his practice on mergers and acquisitions, private equity, joint ventures, investment funds and other general corporate and commercial transactions. He has also represented numerous leading multinational organisations on a broad spectrum of corporate, regulatory, cross-border restructuring and employment matters.
Waltson also advises clients on a monthly and yearly retainer basis, where he provides dedicated services to each client in relation to the issues which clients face, including general corporate and employment related matters.
If you require further information and/or expert guidance on the above or any other area of law, you may wish to contact the author of the article, whose details are as follows:
Waltson Tan Director +65 8079 0028 waltson.tan@28falconlaw.com |
Office address: 101A Upper Cross Street #13-11, People’s Park Centre Singapore 058358 |