Reviewing English-Language Contracts: Five Business Priorities
Before translating an English-language contract, clarify what the transaction is intended to achieve. Five perspectives help focus the review: money, risk, performance standards, exit arrangements and decision-making.
Start with the Transaction
Who will provide what, to whom, when, where and how? Ask the business team about anything the contract does not explain. For a systems agreement, for example, the provisions to review will depend on whether the scope includes development, licensing, maintenance or all three.
1. Follow the Money
Check the invoicing conditions, payment deadlines, additional charges and allocation of exchange-rate risk, as well as the amount and currency. If charges depend on usage or sales, a clear formula and reporting and verification process can reduce disagreements during performance.
2. Allocate Risk
Consider late delivery, quality defects and third-party claims. Who bears which losses? Look beyond the liability cap to its exceptions, indemnities, insurance and the other party’s ability to pay.
3. Define Performance Standards
Check how completion and acceptance are determined, and whether the standards align with the procedure. If the inspection period, process for requesting corrections or consequences of delayed acceptance are unclear, the timing of payment may also be uncertain.
4. Plan for the End of the Contract
Alongside termination rights, review outstanding payments, return or deletion of data, loaned equipment, transition assistance and confidentiality. A right to end the agreement may be of limited practical value if the information and assistance needed to move to another provider are unavailable.
5. Clarify Who Decides and Who Acts
Check authority and procedures for specification changes, approvals, subcontracting and incident notifications. Where the other party’s approval is required, consider the response deadline and what happens if agreement cannot be reached.
Prepare Before the Review
A short summary of the business objective, essential terms and intended operating arrangements helps focus the review. These five areas are a starting point, not a substitute for checking transaction-specific regulation and the governing law.
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Reference
The five perspectives draw on Tina L. Stark, Drafting Contracts: How and Why Lawyers Do What They Do, 2nd ed. (2014), pp. 369–376. The examples in this article have been adapted for this website.