Dissect contracts before you sign

Unless you’re a lawyer, you may not know what to look for in a contract before you draft or sign it. And you may not have the time or money to hire an attorney whenever you’re thinking of establishing a contractual relationship.

While we don’t want to discourage you from seeking qualified legal help for your most important, high-stakes contracts, these tips can help you avoid problems with more routine matters:

Take a broad view. In most business contracts, the whole counts more than its parts. When disputes arise, judges and mediators tend to evaluate the overall intent of the document. If one section goes against the grain of the rest of the contract, then it may not be enforced with equal power.

That means you shouldn’t try to bury a rigid or highly restrictive clause in an otherwise expansive or flexible contract. If you must insert a condition that’s obviously inconsistent with everything else, then at least design the special section in bold, larger print to call everyone’s attention to it.

Know the custom. Always consider the industry norms within which the document applies. Because few contracts can anticipate all the outcomes or contingencies that might arise, most judges will weigh custom, common usage and trade practices to interpret the agreement in the proper context.

That means if you insert provisions that clash with what’s customary in your industry, don’t expect to see your position upheld in court. As a precaution, state in the contract that both parties acknowledge that the terms of the deal do not jibe with industry norms—and that they want to proceed with the agreement nevertheless.

Avoid slang. In a dispute, you’ll want to build your case around simple, explicit, easily comprehensible wording in your contract. If you use acronyms, buzzwords or other lingo, you invite problems. Courts frown upon ambiguity, and they’ll usually rule against the party that drafted an unclear or vague contract.

If you must use complex or technical terms, insert a “definitions” section in which you describe the meaning of these words in everyday English. If a word has dual meanings and it isn’t defined in the contract, courts will probably apply its most common, simple version to the matter at hand.