Every commercial contract creates obligations as much as it grants rights. In practice, a significant share of disputes stems from a handful of basic points overlooked at the signature stage. Here are the five points to verify before signing:
1. Confirm the parties and their authority
The counterparty's full legal name, registration details and address should appear in the contract completely. Check whether the person signing is actually authorised to bind the company. A contract signed by an unauthorised person may later be challenged as non-binding.
2. Define the obligations without ambiguity
Vague wording such as "the necessary services will be provided" invites conflicting interpretations in a dispute. What will be delivered, when, at what quality and for what price should be written clearly and in measurable terms.
3. Read the term, renewal and termination clauses
When the contract ends, whether it renews automatically and under which conditions it can be terminated are among the most critical clauses. Automatic renewal combined with long notice periods can keep parties locked into a relationship they no longer want.
4. Assess penalty clauses and liability caps
The amount of contractual penalties, the breaches they attach to, and whether liability is capped directly determine your commercial risk. One-sided, heavy penalty clauses should be negotiated; limitation-of-liability provisions deserve careful review.
5. Check dispute resolution and jurisdiction
Which law governs the contract and which court or arbitral institution has jurisdiction should be known before signing. In cross-border contracts this clause is the single most important factor determining the cost and duration of enforcing your rights.