Five things to check before signing any commercial contract

Many commercial disputes start with a contract that wasn't reviewed carefully enough. Before signing any commercial contract, make sure you've checked at least the following.

First: precisely defined obligations — who is responsible for what, within what timeframe, and against what measurable standard.

Second: termination terms — can either party terminate, on what notice, and with what financial consequences?

Third: dispute resolution — does the contract specify arbitration or litigation, and in which jurisdiction?

Fourth: penalty clauses — are they proportionate to the likely breach, or skewed heavily in one party's favor?

Fifth: amendment terms — how can the contract be changed later, and does that require written consent from both parties?

A focused legal review before signing is almost always far cheaper than a dispute that follows from loose drafting.