THINGS YOU SHOULD KEEP IN MIND BEFORE ENTERING INTO A CONTRACT
PARTIES TO THE CONTRACT
The Contract should contain full details regarding the parties to contract. Minor, insolvent or unsound mind person cannot enter into a contract. For example you are entering into an employment contract with your employer then you should see whether the exact and accurate details of the company are given in contract or not.
LEGAL NATURE OF CONTRACT
You should understand the legal nature of contract. Legal nature refers to the type of contract you are entering into and its validity under law. This will help you to know your legal position. For example entering into an agency contract gives you principal and agent relationship.
LAWS GOVERNING SUCH CONTRACT
Keeping a brief idea of law governing such contract is very important. It will inform you about rights and liabilities and consequences of breach of such contract or any other irregularity. For example you are entering into hypothecation contract then there are laws provided in Sale of Goods Act governing hypothecation.
ROLES AND RESPONSIBILITIES
Generally this clause regarding roles and responsibilities is attached in appendix of contract. So before signing a contract just read the appendix once regarding your roles and responsibilities after entering into such contract. For example in a building contract the manner in which the kitchen, almirah and windows need to be made and in how much time.
TERM OF CONTRACT
Term of contract refers to duration of contract. Generally people do mistakes. They sign a contract and then afterwards want to release themselves from performing legal obligation under that contract. You should definitely check once the duration for which such contract will be in operation. For example you are entering into a service contract then you should check for how many years you are obliged to provide service to that company or any individual.
You should keep a check on the risk involved after entering into such contract. For example you are entering into contract of merger then the risk involved includes failure of business. In case of various contracts law provide for exorbitant penalties which should be taken care of.
FINANCIAL OBLIGATIONS/ CONSIDERATION
Any contract without a valid consideration is invalid. So you should check once the monetary or non monetary consideration of contract. For example in an employment contract whether the salary you have been told is the one which is entered in the contract.
NON DISCLOSURE AGREEMENT
Every commercial contract is accompanied with a non disclosure agreement or non disclosure clause. Non disclosure clause set forth obligation of parties to preserve the confidential information and trade secrets of the contracting party.So make sure that you check the specific details of that clause and validity of that clause. In case you ignore it, it can get you in trouble and you might be discarded from your job.
SETTLEMENT OF DISPUTES
Lastly, dispute is the end of every contract.So, before entering into a contract you should check the clause of mode of settlement of dispute. In case any dispute arises then, what will be the mode of settlement? This will avoid any future legal problems. If the mode of settlement is arbitration then whether it is adhoc or institutional?