Learn to Read Your Contracts. And Do It Fast.

If you don't read a contract carefully, you risk being taken for a fool and you risk creating liabilities that exceed several times the value of the contract. There are many, many areas where you can take unnecessary risks:

• Unclear liabilities, unclear receipt clauses, unclear payment clauses. You might not get paid and you even might be asked for money.
• Copyright – you might give exclusive rights for your work (a course or a project template) to a customer, unknowingly.
• Non-compete clauses – you find yourself no longer able to work with anyone in an industry or multiple industries without the client's explicit consent.
• Personal data clauses/GDPR – direct payment clauses in case of an incident, direct payment clauses in case of non-conformities, payment of a full audit (30-40,000 EUR) if the audit finds non-conformities.

The lawyer our legal counsel helps you on the legal side, not on the commercial side.

Don't rely on the lawyer/ legal counsel to understand your business aspirations or to know exactly what you agreed with a customer or a supplier. A lawyer looks at a contract and interprets it legally. If you don't ask him/her what a certain clause means and what obligations it brings, the lawyer or legal counsel will not proactively come to you to explain all the commercial implications. Therefore, you MUST read the contract carefully.

Lawsuits cost money and time.

Big companies and corporations also have time and money. They are extremely good at expanding legal trials over many, many years. Small and medium-sized companies even if they have money, they certainly don't have time. That's why they start at a major disadvantage in the event of a commercial conflict. To avoid a commercial conflict, read what you're about to sign before you sign! You read, negotiate, read, modify, negotiate, read again. The contract must be win-win.

A contract is signed by people, on behalf of people or companies.

If a contract is signed between two individuals, it will usually is a win-win contract. Of course, you know who X is, who Y is, you can reach agreements. But even there you have to be very careful. However, when one or both parties to the contract are commercial entities, contracts are signed by people on behalf of companies. It doesn't matter that you sign the contract with Joe or Jane, your good friend from the customer with whom you went out having beers, if in two years Joe/ Jane is no longer in the same position and Jack comes in that position, who can't stand you. Jack will give you hard time over the contract that you signed due to the friendship with Joe or Jane.

At that point, what saves you is the contract. Only the contract can hold companies accountable for what they do and don't do. Why I said this: I often hear in negotiations, from suppliers or customers of my clients, things like "leave that clause there because you know very well that we would never do what it says there", etc. I emphasize the fact that today you might be talking to X and Y, but tomorrow X and Y are somewhere else or in a different position.

I have experience in such negotiations, where in year 1 I discussed with one team of the client's supplier, in year 2 at renewal with another team and in year 3 with another team. They were all trying to "return" to the basic contract with data protection clauses that made no sense or logic, saying "but you know we never...". No, we are signing what we initially agreed on because they are balanced clauses.

Complying with various laws such as GDPR does not mean agreeing to clauses that make no sense.

If you have good consultants, who understand your business and who understand your need for profit, they will help you in negotiations with customers and suppliers, to eliminate nonsense from personal data processing agreements and from contracts. But you also need to read carefully, you can't just rely on the consultant here. We, at Tudor Galos Consulting (advertising moment), look very carefully and explain everything to the client, in his language, so that he understands what obligations he will have and then together we decide which risks can be taken and which cannot. But not everyone does the same, that's why you need to learn to read contracts.

The other side of the coin – the Disney case.

In the United States there is now a shocking case, in which a woman who went to a restaurant in a Disney park died after eating something with allergens, although she had told the waiters several times that she had allergies. The lady's husband sued the company, for gross negligence that led to the death of a person.

And here comes the shocking phase: the company's lawyers requested the dismissal of the lawsuit, arguing that the lady in question had had a Disney+ trial for which she had accepted the terms of use(which have the value of a contract). Among the first clauses was one that said in all capital letters, that ‘any dispute between You and Us, Except for Small Claims, is subject to a class action waiver and must be resolved by individual binding arbitration.

In Europe, such a thing would not have happened, as European human rights are enshrined in the Treaty on the Functioning of the European Union. Among them, Article 6, The right to a fair trial. These rights are not negotiable or tradable. You cannot sell your freedom, become a slave, etc.

But the lesson remains: read the contracts. Read them carefully because you may find surprises in them. Don't rush to sign.