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5 key steps to take before signing a business contract in New Zealand

Hand signing a contract

Most businesses in New Zealand will need to sign a business contract with other businesses, especially as they grow and expand their operations. For instance, you might be looking to sign a contract with a new:​

However, these contracts sometimes cause issues for companies later on, particularly if you are not fully across the details of the contract. This article will outline five key steps to take before you lock your company into a contract.​

1. Check if the right parties are signing the business contract

Checking if the right parties are signing the contract is more complicated than it might appear. It frequently leads to issues down the line if you sign a contract with an entity different from the one you expected. This typically is an issue when the other party has a lot of associated companies or entities.​

For this reason, it is essential to ensure the signatory (whoever is signing for the other party) is representing the company or entity that you want to be in a contractual relationship with. ​

It can be difficult to enforce a contract if the wrong business entity or wrong person has signed for the other party. Equally, make sure your details and contact information is correct on your end, as well as the other party’s. That way, any notices given under the contract will be sent to the correct place. Additionally, correct details are vital if you end up seeking to terminate the contract later on.​

2. Double check the details

Most business contracts have nitty-gritty details of some kind or another, such as numbers. It can be easy to assume that the numbers are correct and skip to the signing section at the end.​

However, you should take a few extra minutes to ensure the details are what you agreed.​

It is common for mistakes to be made when contracts are drafted, particularly regarding numbers. Here, it is much easier for all parties when these mistakes are recognised before the contract is signed. ​

For example, if your contract includes a price, check to see whether that price increases annually or through some other arrangement.​

3. Know the business contract’s time frame

The time frame and how the contract might be terminated are crucial for you to understand before you sign an agreement. Whether the contract is a short-term or a long-term arrangement is clearly key for your business strategy, but it is also important for other parts of the contract. ​

For instance, if the contract ends in a few months, you benefit from not being locked into a long legal relationship if there are any issues with the other parties. However, if it ends after a long period of time, it is especially important to have a robust dispute resolution clause. ​

4. Check what happens if a dispute occurs

While it may seem unlikely when you sign a business contract, there is a chance that an issue or serious disagreement will eventually crop up between your business and the other party. When that happens, you need clarity about how to resolve issues with them. ​

A dispute resolution clause provides a process for resolving these issues and what happens if they cannot be resolved. Make sure you understand how the dispute resolution process works and that you are comfortable with it.​

5. Talk to a lawyer

While you will know your business inside and out, it is strongly recommended that you have a lawyer check over a commercial contract before you sign it. This is especially important if the contract is a long-term or strategic agreement. It is likely they will be able to spot any issues in the contract’s drafting or highlight important details that are easy to miss. Given that the other party is likely to have their own lawyers looking over the contract and may have drafted it themselves, you should ensure you minimise the risk on your end.​

Key takeaways

It may be an exciting time when signing a new commercial contract for your business. However, before signing any contract, there are five key steps you should take, including:​

  • checking that the right business or person is signing the contract for the other party;
  • double-checking the details and any numbers in the contract;
  • checking the contract’s time-frame;
  • checking the dispute resolution clause; and 
  • asking a lawyer to check over the contract if you can, especially if it is an important or long-term contract for your business.

If you need help with a contract for your service-based business, LegalVision’s experienced contract lawyers can assist as part of their membership, which includes unlimited consultations with lawyers and unlimited document drafting, among other benefits. Call LegalVision on 0800 447 119 to learn more.​

Frequently asked questions

How long are contracts binding?​

The contract itself should set out how long it will take effect and the time period of any obligations you and the other party owe each other. There is no standard period for contract length, so it depends on the circumstances. ​

What happens when there is a dispute about how the contract operates?​

The contract should have a dispute resolution clause that sets out what happens if a dispute eventuates between the parties. Usually, the clause will set out some form of mediation or arbitration to resolve issues that the parties cannot otherwise solve between themselves. ​

What happens if there is a mistake in the contract’s drafting?​

Before signing the contract, alert the other party to the error – there is a high chance that it was a genuine error. The contract should be adjusted accordingly before you sign. If the other party disputes that there is a mistake (ie, that there is a disagreement about the terms), that requires further discussion over what the term should be. It is good to spot this before you sign!​

What happens if you have signed the agreement already, but there is a mistake?​

You should immediately contact a lawyer. It is complicated to exit or change contracts after you have already agreed and started the contract, so it is important to get professional legal help.​


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LegalVision is a commercial law firm that provides businesses with cost-effective and high-quality legal services through an innovative model.

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