8 Essential Contract Reviews: Tips for Sales Professionals

Client contracts can be a minefield for a sales professional. However, becoming an expert in contract review contributes to successful and smooth business transactions. This article discusses major contractual pitfalls and offers strategies for resolving them so that you can negotiate terms confidently and turn pages of client contracts with confidence.

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The relationships you build are imperative towards showing that you have a thorough understanding of your client contracts. Verbose clauses and legalese frequently conceal crucial terms that could harm your company and incur liabilities.

Improving your focus and attention can help you better navigate and comprehend these clauses. Explore these methods to improve focus and attention. We will cover a significant amount of what to look for in client contracts in this article, as well as provide simple, workable solutions to frequently encountered issues.

a) Explanation: The no-edit clause can be a sign that your client still sees you more like a vendor than a collaborator. You must be able to defend the necessity of making changes that fairly and adequately represent the interests of both sides. Effective handling of customer complaints can further ensure fairness. Here are techniques for handling customer complaints.

b) Strategy Implementation: Through editing, this should be gently explained in a way that produces a win-win solution.

c) Leverage: Hope for better results when making reasonable contract modification requests.

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a) Explanation: Under indemnity clauses, your business is typically held accountable for any losses. They frequently act unilaterally, which means they don't defend your rights.

Next Steps:

i) Mutual Defense: Include mutual defense against any injuries sustained.

ii) Legal Evaluation: To ensure that the duties are evenly distributed, your legal team should go over and revise the indemnity clauses.

a) Explanation: Customers themselves may include requirements stating that you will be responsible for paying their legal fees should they file a lawsuit. These charges can be extremely high, and most insurance policies won't cover them.

Plan of Action:

i) Remove or Restrict Fees: Attempt to remove clauses relating to attorney fees or impose a fair liability cap.

ii) Examine Insurance: Examine insurance coverage to make sure it satisfies contractual obligations and is adequate.

a) Explanation: Certain insurance types and limits may be specified in client contracts, which can vary greatly depending on the industry.

Next Steps:

i) Verification of Coverage: Make sure the insurance policies your company has meet or exceed the amount specified in the contract.

ii) Provision of Proof: During the term of the contract, keep in mind that you must be able to produce proof of insurance.

a) Explanation: Long payment terms associated with large client contracts will impact your cash flow. There might not be any penalties for late payments in these contracts.

Take Action:

i) Payments for Milestones: To ensure timely cash flow, negotiate milestone or performance-based payments.

ii) Late Fees: To provide a sufficient incentive for on-time payments, impose late fees for missed payments.

a) Explanation: A contract's termination provisions specify the conditions under which any party may end it. Such terms may subject your business to heavy obligations.

Next Steps:

i) Reasonable Terms of Termination: Make sure the termination clauses include reasonable notice requirements and times.

ii) Maintaining Records: Agree to retain the necessary records for the duration specified in the contract.

a) Explanation: Generally, a contract specifies how a dispute is to be resolved—through arbitration, mediation, or courtroom action.

Next Steps:

i) Suggested Procedures: Speak with your legal department to determine the most appropriate dispute resolution procedure and location.

ii) Clarity of Jurisdiction: Make sure the contract specifies the applicable law and the location for resolving disputes.

To ultimately close a profitable and equitable business transaction, any sales professional's objective must include mastering client contract reviews. Understanding the most typical contract pitfalls will therefore help you during the negotiating process to safeguard interests in order to establish a fruitful working relationship with your clients. Above all, make sure your legal team is involved in the review process and understands the implications of each and every contractual clause.