Commercial contract audit

Most businesses run on contracts nobody has read in years. They were signed by different people on different templates, some on the customer’s paper and some on the supplier’s, and they were amended by email whenever a deal changed. None of this matters while things go well. It matters when a key customer leaves, a buyer asks to see the full set before an acquisition, or a claim arrives and the clause everyone relied on turns out to say something else.

An audit reads those contracts the way a court or a counterparty would, one type of clause at a time across the whole portfolio, and ranks what it finds by the risk it carries. It usually looks at:

• the rules on whose general terms and conditions govern a deal when both sides have sent their own;
• the rules on who may sign for the company, and whether a contract signed without that authority holds;
• the rules on limiting and excluding liability, and on the clauses a court may refuse to enforce;
• the rules on tacit renewal, and on contracts that roll over because nobody gave notice in time;
• the rules on assignment and change of control, which decide whether contracts survive a sale or a reorganisation;
• the rules on penalty and liquidated-damages clauses, and on a court’s power to reduce them;
• the rules on confidentiality undertakings and on what may be done with information received from a business partner;
• the rules on which law governs each contract, and on the terms that apply whatever the contract says.

Our lawyers can support you with this.