Before signing, have the term and renewal, the termination, the limitation of liability, the indemnity, the intellectual property and the personal guarantees checked. What the contract does not say counts as much as what it does. A review by a lawyer costs $60 a page at Labo Legal, a 30-minute consultation included.
A contract handed to you was drafted by someone whose mandate was not to protect your interests. That is not bad faith, it is the nature of the exercise. The question is therefore not whether the document leans, but how far, and whether you can live with it.
The six clauses that bind you most
Term and renewal. This is the first place one looks, because it is the clause that produces the most unpleasant surprises. A one-year contract that renews automatically unless notice is given within a narrow window, say between 90 and 60 days before expiry, binds you for a second year if you let the date pass. Note that window in your calendar on the day you sign, not on the day you want to leave.
Termination. Can you bring the agreement to an end? On what conditions, with what notice, at what price? A contract that provides termination for the other party and not for you is not necessarily invalid, it is simply unbalanced, and that is better negotiated before signing than after.
Limitation of liability. It caps what the other party owes you if things go wrong. A cap set at the fees paid over the last twelve months can be trivial next to the harm a failure would cause you.
The indemnity. Its mirror image, and often the most dangerous. It obliges you to take on a third party’s claims against your counterparty. Drafted broadly, it can expose you well beyond the value of the contract.
Intellectual property. Who owns what is created during performance? Without a clear clause, the principle is rarely the one the client imagines. It is one of the most widespread mistakes at the start, as our article on the common mistakes.
Personal guarantees. A suretyship signed by the officer cuts straight through the protection incorporation offers. It can sometimes be negotiated, limited in time or in amount, but you have to have seen it first.
What the contract does not say
A document is judged as much by its silences as by its clauses. The absence of a termination mechanism locks you in until the term. The absence of a liability cap leaves you exposed without limit. The absence of an intellectual property clause leaves the question open, and therefore negotiable at the worst moment.
Silence on process is just as costly: how a disagreement is settled, before which court, under which law. Two Québec businesses that sign a contract subject to another country’s law and courts discover, on the day of the dispute, that asserting their rights costs more than the claim itself.
Three ways to approach a contract
Faced with a document to sign, you have three options, and they are not equally good depending on the circumstances.
| Sign as is | Have it reviewed | Have one drafted | |
|---|---|---|---|
| What you get | Nothing beyond the document | A critical reading and comments | A document written in your interest |
| Who drafted it | The other party | The other party | You |
| Coût | None, until the problem | Proportional to the length | Higher |
| Délai | Immédiat | A few days | Longer |
| What we think of it | We do not recommend it: signing without advice means accepting obligations you have not measured | The habit to adopt as soon as a document really binds you | When the agreement comes from you, or will be repeated with several clients |
Depending on where you stand, here is the matching service.
Where the law already protects you, in part
An honest nuance is called for, because not all contracts carry the same level of risk.
Some rules are ofordre public: they cannot be departed from by contract, and a clause attempting to do so has no effect, whether or not you signed it. Consumer protection in Québec works largely this way. Telephone contracts, subscriptions, contracts for successive performance and consumer credit are governed by mandatory rules on content, termination, advertising and warranties. The supplier drafted the contract alone, but could not write just anything.
The Civil Code adds a protection in contracts of adhesion, those whose essential stipulations were imposed by one party with no possibility of negotiation. An abusive clause, a clause illegible or incomprehensible to a reasonable person, or an external clause that was not brought to your attention, may be annulled or reduced by a court.
That is why many people sign their mobile phone plan without consulting anyone, and it is not unreasonable: the imbalance there is already partly corrected by the law.
That protection does have limits worth knowing. It aims first at the consumer, that is, the natural person contracting for personal purposes; it generally does not apply in the same way when you contract for your business. Nor is it automatic: having it recognized means raising it, sometimes before a court, which costs more than the reading you would have had done beforehand. And it says nothing about the commercial sense of the agreement.
The practical rule we apply: the more important the contract is to you, by its term, its amount, its place in your activities or what it stops you doing elsewhere, the less you should count on the law to catch you. Have it read.
The right moment is beforehand
The cost difference between having a contract checked and trying to get out of one is an order of magnitude. Before signing, you negotiate a clause: it is a commercial conversation, often brief, and the other party expects you to have requests. Afterward, you are trying to escape a valid undertaking, which is an altogether different exercise, generally long and rarely successful.
There is one useful exception: the contract that renews. If you are already bound, the non-renewal window becomes your moment of negotiation. Having the document reviewed a few months before that date gives you time to prepare your requests rather than suffer an automatic renewal.
What a review does not do
Let us be clear on the scope, because a service believed to be broader than it is produces disappointment. A review tells you what the contract contains, what exposes you and what would be worth asking for. It does not rewrite the document, it does not negotiate in your place, and it obviously does not guarantee the other party will accept your requests.
Nor does it take the business decision in your place. A contract carrying an identified risk can still be a good deal if the margin justifies it. What you get is to decide knowing, rather than hoping.
If your question goes beyond the document — choosing a structure, framing an association, settling a dispute that has already broken out — what you want is a consultation , not a review. And among partners, the document that deserves the most attention remains the shareholder agreement, because it is the only one that provides for what happens when the relationship ends.
Preparing so the review is worth it
Three things make the exercise markedly more useful. Send the complete version, schedules included: it is often in a pricing schedule or a policy incorporated by reference that the obligation that counts is found. Tell us what worries you and what you cannot accept; a lawyer who knows your limit steers the comments toward what is useful to you. And indicate your real commercial room to manoeuvre, because the recommendations are not the same depending on whether you can walk away from the deal.
Finally, allow time. A contract that has to be signed tomorrow morning reviews badly. The startup checklist moreover places contracts among the four documents to deal with in the first months, precisely to avoid that scramble.
Frequently asked questions
What does a lawyer check in a commercial contract?
First the term and the automatic renewal, the conditions of termination, the limitation of liability, the indemnity, the intellectual property and the personal guarantees required of the officer. Those are the six clauses that bind you most.
Does the law protect me if I sign without a review?
In part, and only in some cases. Consumer protection is of public order and the Civil Code governs abusive clauses in contracts of adhesion. But that protection aims first at the consumer and generally does not apply in the same way when you contract for your business.
How long before signing should a contract be reviewed?
Allow three to five business days for a serious review. A contract that has to be signed the next morning reviews badly, and the negotiating room disappears along with the time.