AT the beginning of a business relationship, parties are excited to get started — to get the contracts signed and get on with their project.

Ironing out the specific terms of the contract seems like a dry, uninteresting and tedious exercise when compared to the excitement of starting a project, moving towards its completion and, the very best part, getting paid for it.

However, prudent business practices require us to take a moment to be a little bit of a worrier. We need to protect ourselves and think about what might go wrong and try to put terms into our agreements that will address any foreseeable trouble spots.

The usefulness of a clear agreement embodying the terms of the bargain the parties have struck is obvious in the event that a dispute arises. However, the exercise of taking the time to consider and negotiate around the issues below is also an extremely valuable exercise for parties who want to make sure they get the most out of the transaction, whether or not a dispute arises.

THE MEAT OF THE MATTER

Is the subject matter of the contract clearly defined? Are the conditions of satisfaction well established? How are variations and delays going to be treated?

MONEY

Are payment terms clear? Do you need a deposit to get started? What happens to the deposit if the agreement is terminated before completion?

PROPER PARTIES

Do you have the power to do everything you say you will do under the contract? In an agreement for the sale of land, do you have the power to deliver the good title you have promised to the purchaser?

THIRD PARTY APPROVALS

Are any third party or government approvals or consents required? Is it easier for one party to procure whichever approvals are necessary? Is it clear who will bear the responsibility and expense of procuring these approvals? Is it a situation in which the parties will have to work together to provide the necessary information, and if so, is this clearly stated?

THIRD-PARTY LIABILITY

Who is responsible for insuring against the risk of injury to third parties? Is one party going to be required to indemnify the other party against third-party liability? Is that reasonable in the circumstances? Is the subcontractor required to take responsibility for any third-party liability that arises from the conduct of its employees on a project or worksite, is this requirement appropriate in the circumstances?

REPRESENTATIONS

Are you relying on particular information or statements from the other party? Or are there certain conditions that must be satisfied so that you will be able to perform your part of the bargain? If so, consider including these representations and conditions in the agreement.

DURATION

How long do the parties want to be bound to these terms of this bargain? Will we have automatic renewals? On what conditions can one party or either party terminate the agreement before the end of the contract period?

FORCE MAJEURE

Can either party be excused from performance when performance becomes impossible due to “act of God” or perhaps the insolvency of either party?

DISPUTE RESOLUTION

Consider whether you want to choose arbitration or litigation in the courts as the forum for resolving any disputes which may arise. In an arbitration, the parties will be obligated to pay the arbitrator; however, the process is more party-driven and can be concluded more quickly and efficiently than litigation through the courts.

Perhaps the parties may want to set a minimum monetary threshold for disputes to be submitted to arbitration in light of the cost of an arbitrator. In addition, consider the venue and whether you wish to agree to restrict the parties to litigation or arbitration in a particular city or country.

Don’t be afraid of appearing to lawyer-up — establishing a clear understanding of what each party expects is a great way to commence a business relationship.

Shani Nembhard is an associate at Myers Fletcher & Gordon and is a member of the firm’s Litigation Department. Shani may be contacted at shani.nembhard@mfg.com.jm or through www.myersfletcher.com.

This article is for general information purposes only and does not constitute legal advice.