Written contracts are part of everyday life. Whether you are buying a unit, selling a business, leasing a shop, building a house, engaging a contractor to provide a service, signing a mortgage or loan agreement, or selling shares in a company, there will be a standard written document to be signed.
Many transactions are documented by a standard form contract. An obvious example is the series of standard REIQ contracts for the purchase and sale of land, houses, units, commercial properties and businesses.
Before the deal is entered into, the buyer will be given the standard contract, with the details completed by the seller’s agent or solicitor and asked to sign.
Obviously, it is important to have standard contracts because they: –
- give certainty of knowing that the basics are covered;
- are familiar to agents, solicitors and experienced buyers and sellers; and
- reduce the time and costs involved in getting legal advice and getting the contract signed up.
But it can be daunting to be faced with pre-printed or standard form contracts and told to sign them because they are “standard”.
Often the contract is long, tightly printed in small font, and complex. It is tempting to trust the other party and just sign the thing to keep the deal moving.
Don’t!
In a perfect world, everyone could be trusted to do the right thing if something happened during the course of a transaction which required one party to be given some leeway to do something. But written contracts exist for good reason: to give certainty to parties in their commercial affairs, and to decide the point where there is a problem.
Commercial and property lawyers spend much of their time helping clients to disentangle themselves from contracts which have been signed up without sufficient knowledge before signing. Often this is due to the operation of the standard terms found in these contracts, where the client’s situation makes it difficult or impossible to comply with the contract.
A contract should be reviewed and understood to ensure that it is fit for each particular deal. This is true of the simplest purchase of land right through to a complex business deal.
A major factor in making contracts accurate and fair is to add special conditions. The benefits of special conditions include:
- The ability to modify the standard conditions in ways agreed between the parties;
- Protection of a party by enabling the contract to be terminated if an agreed event doesn’t happen – for example, a purchase of a business subject to satisfactory due diligence; or a land purchase which is made subject to the buyer’s sale settling; or hundreds of other possibilities which are specific to each particular deal.
Special conditions modify and take precedence over the standard terms. However, special conditions must be carefully drafted to achieve exactly what the parties have agreed.
Over the years, I have usually worked with special conditions which are fairly logical and commercial, as well as some truly weird and wonderful ones. It doesn’t matter: special conditions can be inserted to satisfy whatever requirement is needed to get the deal done.
Legal advice on a contract is highly recommended. FC Lawyers have advised on thousands of contracts of all kinds, for many years. Advice can be provided quickly, so don’t “sign in haste, repent at leisure”: get advice first.
If you want to find out more about special conditions or contracts, please don’t hesitate to contact our team.
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