Navigating Legal Minefields: A Guide to Effective Contract Review for Future Solicitors

Nov 30, 2023

Written By Paddy Carey

Reviewing a contract is like navigating a legal minefield: one missed clause, one absent-minded misstep, and kaboom, you’ve detonated a dispute. Simple mistakes can have lasting repercussions for business finances and reputations, so effective contract review is crucial for future solicitors. This article will provide practical guidance that will empower you to disarm dubious clauses and navigate legal minefields with confidence.

Understanding the fundamentals of contract review

A contract is a legally binding agreement between parties which sets out terms governing their relationship, itemising the parties’ responsibilities and obligations. Contracts are usually written in precise and unambiguous ‘legal language’, designed to be clearly understood and enforceable.

The building blocks of contracts are clauses and terms. Clauses are paragraphs of text that address general aspects of the agreement such as procedures for indemnification (compensation for harm or loss) or arbitration (an alternative to going to court), while terms provide specific information about the contract such as timeframes and the parties involved.

A valid contract needs to contain six basic elements.

Offer – a clearly defined object or service that is being traded.
Acceptance – the parties have agreed to the contract, typically by signing.
Awareness – the parties know they are entering into a legally binding contract.
Consideration – there is an exchange.
Capacity – the parties demonstrate the legal capacity to enter a contract. For example, being under the influence of alcohol might make this void.
Legality - The contract abides by the laws of the jurisdiction in which it is signed.

Contract law in the UK is founded upon common law principles which have been developed through judicial decisions over the years. Other frameworks and regulations also play a significant role, such as the 1979 Sales of Goods Act and the 2015 Consumer Rights Act. Compliance with these frameworks is paramount to ensure the enforceability of a contract, reduce risks, maintain legal accountability, and protect reputations.

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The skills and knowledge needed to identify legal pitfalls

An eye for contract law

Contract review goes beyond installing Grammarly. You must ensure the contract is legally sound, fair for all, and won’t cause complaints three months down the line because of an absent confidentiality clause. When reviewing a contract, make sure you are paying close attention and read each section twice.

Interpretation skills

Interpretation skills are essential when assessing the intended and unintended meanings of clauses. When reviewing a complex clause, it’s useful to list all the ways it could be (mis)understood. Are there any legal ambiguities or hidden assumptions? Is verbose language making it difficult to interpret?

If you can’t whittle a clause down into plain and concise language, it might need to be rethought. This is essential for eliminating legal pitfalls and ensuring the contract is easy to follow with clear pathways throughout.

Industry specific insight

Knowledge of your client’s business objectives and industry is crucial when reviewing a contract. This includes understanding sector-specific terms and acronyms, legal complexities, risks, opportunities, and the context in which a contract is being written.

This knowledge will enhance your understanding of the contract and its implications. It may even open opportunities for suggesting improvements based on the client’s needs.

Risk assessment

Part of effective contract review is the ability to proactively identify, evaluate, and mitigate/limit exposure to risks for the signing parties. For example, force majeure (greater force for which no party can be held accountable) clauses can reduce contractual risks for clients operating in areas frequently impacted by disruptive weather patterns like flooding or tornadoes.

While it's impossible to anticipate every risk, it's crucial to evaluate those identified based on their predicted consequences and probability of occurring. One way to evaluate these factors is to measure them using a scorecard. Numerical values can help establish acceptable risk thresholds so signing parties can unanimously agree on what level of risk they find acceptable.

Tips for navigating contract challenges

When annotating a document, it’s important that your alterations are easy to comprehend and follow. You can leave comments on the margins to explain why a change should be made or use track changes on Microsoft Word to leave a paper trail. Highlighting text will also make issues easier to find.

Leveraging technology tools can also enhance the efficiency and accuracy of the review process. AI software (i.e Juro) uses machine learning to screen contracts for errors and risks at breakneck speeds, although it’s worth checking it afterwards for any mistakes.

Drafting comprehensive reports

Transparently communicating contract review findings is crucial to building trust with clients, fostering positive professional relationships, and mitigating risks. Findings should be compiled in a report written in plain and clear language and sent over in a timely manner. A glossary of key terms and legal definitions facilitates easy reading.

The report should start with an executive summary addressing critical issues, followed by an introduction outlining basic information such as the parties involved and important dates. After that, the report should assess compliance with applicable laws, evaluate risks and impacts on business objectives as well as present any other recommendations.

Continuous improvement and professional growth

Learning effective contract review is a lifelong skill, so look for opportunities for continuous development. Attend skills workshops, courses or events (AllAboutLaw hosts many!) to stay on top of your game.

Additionally, many firms offer global virtual internship programmes which provide practical experience in contract review and writing reports.

Mentorship from seasoned legal professionals is also invaluable. If Mike Ross isn’t a family friend, you can apply for mentoring on sites like Legal Geek and GROW Mentoring. You could also approach legal professionals on LinkedIn.

Over to you

Mastering contract review is crucial for a successful career as a solicitor. Developing the required analytical skills, embracing insider tips and adopting a growth mindset will serve you well on this mission. So, remember to put these tips and strategies into practice the next time you find yourself in a (legal) minefield.

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