The pitfalls of standard contracts: Check your T’s & C’s
06 Mar 2019
A contract can relate to anything from a lease to a simple retail account agreement. Many people view a contract as a document with unfamiliar legal jargon. Although a contract might be hard to read and understand, signing without fully understanding what you are agreeing to, is always unwise.
Always read a contract’s terms and conditions – the T’s and C’s – before agreeing.
How the law sees a contract
According to law, a contract is an agreement between two or more parties creating legal rights and obligations which must be upheld by all parties. It can be written, oral or partially written and oral.
The legal jargon
The use of language in contracts has specific meanings and this may alter your legal status within the contract. Terms such as “shall” or “must” infers that one is obligated to perform in terms of the contract, whereas “may” renders an option of performance.
It is preferable to draft a contract in plain language for all parties to understand without changing the legal meaning of words. This can only be done when a specific legal meaning cannot be altered, for example “indemnity” cannot be changed to “pay you back” or “reimburse you“.
The T’s and C’s
Standard terms and conditions in contracts – often displayed in very small print! – are mostly overlooked or not paid attention to by the party signing as they regard it as standard legal jargon. This is especially true for those common retail agreements such as cellphone contracts, clothing accounts, gym memberships or insurance contracts. The importance of the clauses is ignored because people do not understand what they mean.
An example of this is the Dispute Resolution and Arbitration Clause. These clauses provide that certain disagreements or disputes arising under the contract should follow a specific resolution procedure. Although it may be favourable, it may also override other contractual remedies and deny your right to approach the appropriate court for relief.
Assess whether a contract is favourable or not
A contract may appear to be “standard” or “favourable” to both parties, but this may not always be the case. The person or company drafting the contract may insert conditions that are beneficial to the company or one party to the contract.
You have the right to negotiate terms and conditions that are beneficial to you before concluding the agreement. It is preferable for every party to read and identify terms and conditions or clauses that may be prejudicial when entering into a contract.
Speak to an expert
It is recommended that any party wishing to enter into a contract should consult an attorney for advice on the legal advantages and disadvantages of any standard contract, to ensure that your interests are protected.
- Is a fixed term contract really that fixed?
- Cancelling a contract? The do’s and dont’s to consider!
- When should a court interfere in a contractual relationship? Pacta sunt servanda & public policy