20 Contract Questions: how do I get to the contract stage?

This is the second of my series of posts called 20 Contract Questions, addressing some of the most commonly asked contract questions I’m asked as well as the key matters I think you need to know to help you
negotiate and manage a contract successfully.
So, we talked last time around about what a contract actually is. Now we’re going to discuss about how you get to the contract stage in the first place.  Obviously, this being a legal guide, I’m going to focus on what this means from a legal perspective and less about the more businessy question of finding the right opportunity in the first place (try somewhere like GamesBrief instead) or more general business advice (try e.g. Both Sides of the Table). 
 
You know from my first post that in order for a contract to exist you need to meet some legal requirements: in particular, you need to have made a specific offer which is specifically accepted, and there needs to be an intention to be legally bound on both sides.  Bear that in mind now as I go through some key steps on the way to getting to the contract stage.

 
(1) Get your head together:
 
Firstly, think about what you want from this contract but also what do you think you’ll get?  Equally, what does the other guy want and what you are prepared to give him?  Obviously, those two are not necessarily the same: how close you can get to your ideal position is down to your negotiating skills, which we’ll come back to on a subsequent post in this series.  To begin with, you’ll want your offer to set out everything what you want (or close to it, depending on your negotiating technique – more on that later).
 
Think about any practical steps you need to take, e.g. to get any information/assets/deliverables etc you might need when it comes to negotiating the contract.  Basic example: if you’re pitching services to a prospective client, what info will you need (e.g. pricing) to get the contract in place?  Sounds basic, but you’d be surprised how many people sleepwalk into a contract without really thinking about what they need on their side before they even start talking to anyone else.
 
Do you need to talk to a lawyer about this deal?  Marshall these resources beforehand, or at least know when you’ll need them (if at all).  My advice: it isn’t just about them telling you how to do something (or not to do it) or for them to help you write the contract.  It’s also about asking their advice about market conditions, what’s doable and what’s not, what the other guy is thinking: in other words, to help you get a good deal.  That’s the kind of advice good lawyers are there for (hint, hint).
 
(2) Ensure the offer and acceptance is set out in writing:
 
Like I said before, contracts don’t have to be in writing but 9 times out of 10 you’ll be better off if they are.  Ditto with the offer that you make to the other guy in order to get the contract process going.  You need to be precise and clear about what your offer is when you write it down: ambiguity will seldom help you because it’s likely to be misinterpreted by the other guy (usually in the way most favourable to him).  Try structuring it by reference to key considerations like:
 
Work to be done
Fees to be paid
Resources required
Timeframe
Allocating risk
Termination
 
Equally, if you get an affirmative response back from the other guy, make sure that acceptance is set out in writing (although usually that won’t happen until we’re a fair bit along the negotiation path).  Email, letter or whatever – makes no difference, as long as you have a record for future reference.
 
(3) The early steps towards writing up the contract
 
Before we have an offer that’s been accepted formally, often you’ll see some legal-ish documents appearing.  They have different names and different formats, e.g. Heads of Term, Memorandum of Understanding, Letter of Intent or Term Sheet (the last one is for financing rounds), but they all serve the same broad purpose: to document the commercial deal that’s being agreed by the parties in a non legally binding way.
 
Why would you want to do this?  Because sometimes it’s helpful to record what the parties intend to give each other, say because the parties want something to work off when it comes to writing up the formal contract or because they want to finesse some commercial details once it is in print, BUT they don’t want to be bound to what they write down. Usually (hopefully) it’s because they’d rather rely on the formal contract once it’s been written up.
 
So, practical advice: use documents like Heads of Terms, Memoranda of Understanding, Letters of Intent or Term Sheets when it suits your interests to have a record of the commercial deal as it’s done, but remember you cannot rely on them legally usually. 
 
The exception is where the parties have expressly agreed that the document is legally binding (this tends to happen slightly more with Heads of Terms than the others) – but in practice there needs to be language about that specifically written into the document for you to stand much of a chance of enforcing it.
 
As a result, if the other side is only willing to enter into one of these kinds of documents with you but nothing more, then they’re just offering you words without legal force.  Always go down the legally binding contract route if you want to enforce what the other side has agreed to.
 
(4) “Subject to contract”
 
Another possibility is that you might receive a contract which is marked “subject to contract”.  As I mentioned briefly last time around, that’s used as shorthand for “I don’t yet have the intention to be legally bound by this contract yet, so I’m just sending this FYI or just chatting with you about it right now”.  So, treat it as such: a contract which might even look like a ‘proper’ contract but is marked ‘subject to contract’ isn’t usually legally binding.  Make sure that phrase comes off before you sign up to anything or start relying on the contract.
 
(5) Negotiate!
 
By this stage, depending on how complicated your contract is, you might either have gone straight from offer to acceptance or (more likely) you’re boxing around each other trying to work out the best deal – this might involve things like Heads of Terms, maybe not.  Basically, this is getting us into the negotiation stage (also known as the “??? = Profit!” stage of contracts).  There’ll be a whole post on that topic next week…
 
Follow us at http://www.twitter.com/gamerlaw or subscribe to our email updates here

18 comments

  1. I have to show my appreciation to this writer for rescuing me from this particular predicament. Because of researching through the world wide web and coming across strategies which are not helpful, I figured my life was over. Existing devoid of the approaches to the difficulties you’ve fixed all through your entire site is a critical case, as well as those which could have in a negative way affected my career if I had not come across the website. Your personal know-how and kindness in dealing with a lot of things was tremendous. I am not sure what I would have done if I hadn’t discovered such a solution like this. I can also at this point look ahead to my future. Thanks for your time very much for the expert and sensible help. I won’t hesitate to suggest your web blog to anybody who desires direction about this situation.

  2. I would like to show some appreciation to the writer just for bailing me out of this type of predicament. Just after searching through the the net and seeing advice which are not pleasant, I believed my life was done. Existing devoid of the strategies to the problems you have sorted out by means of this review is a critical case, and the kind which might have in a negative way affected my entire career if I had not noticed your blog post. That training and kindness in playing with all areas was invaluable. I don’t know what I would’ve done if I hadn’t come upon such a subject like this. I’m able to at this moment look ahead to my future. Thanks very much for your professional and amazing guide. I won’t hesitate to propose your web blog to anybody who will need counselling on this issue.

  3. I enjoy you because of all of the efforts on this site. Betty takes pleasure in going through investigation and it’s really easy to see why. A lot of people notice all concerning the compelling mode you make very important items through this website and as well strongly encourage participation from other people on this matter and our own daughter has been discovering a lot. Enjoy the rest of the year. You are always performing a tremendous job.

  4. I really wanted to send a simple comment so as to say thanks to you for those remarkable recommendations you are writing at this website. My prolonged internet search has at the end of the day been paid with good knowledge to write about with my great friends. I would point out that we website visitors actually are very lucky to exist in a perfect place with so many special people with helpful principles. I feel really grateful to have seen your webpage and look forward to some more thrilling moments reading here. Thank you once more for everything.

  5. I simply had to thank you very much again. I do not know the things I would have implemented in the absence of these creative concepts discussed by you over my situation. It was before a very frightening matter in my position, nevertheless taking note of the very well-written tactic you dealt with that made me to jump with gladness. I am just happier for this assistance and even pray you comprehend what a powerful job you were doing teaching many others using your webblog. I am certain you’ve never come across all of us.

  6. I just wanted to type a comment in order to appreciate you for the pleasant tips and tricks you are posting at this site. My prolonged internet research has at the end been compensated with wonderful knowledge to go over with my good friends. I ‘d state that that many of us site visitors actually are undeniably endowed to dwell in a remarkable community with very many lovely individuals with valuable points. I feel very much grateful to have used the webpage and look forward to really more cool minutes reading here. Thank you once more for everything.

  7. I really wanted to write a quick message in order to say thanks to you for all the fabulous steps you are giving out at this site. My extensive internet investigation has at the end of the day been compensated with brilliant facts to write about with my family and friends. I would state that that most of us website visitors actually are very fortunate to live in a good community with so many perfect professionals with very helpful plans. I feel somewhat grateful to have discovered your entire website page and look forward to so many more cool times reading here. Thanks once again for a lot of things.

  8. Thanks for your whole labor on this site. My mom enjoys working on research and it is simple to grasp why. Most people know all concerning the dynamic manner you present simple things through this web blog and in addition boost participation from others about this theme while my daughter is certainly understanding a lot. Take advantage of the remaining portion of the year. You are carrying out a fantastic job.

  9. I’m also commenting to let you be aware of what a terrific encounter my wife’s girl encountered viewing your web site. She picked up numerous issues, most notably how it is like to possess an ideal teaching style to make the mediocre ones with no trouble learn a number of advanced issues. You undoubtedly did more than my desires. Thank you for presenting those priceless, trustworthy, educational as well as cool thoughts on this topic to Gloria.

  10. I wanted to create you the tiny remark in order to thank you again for these remarkable guidelines you’ve documented on this site. This is simply unbelievably generous of people like you to supply unhampered what a lot of folks could have made available as an electronic book to make some money for their own end, most importantly now that you could possibly have done it in case you considered necessary. The points as well worked as a easy way to understand that other people online have the same zeal much like mine to see great deal more related to this problem. I think there are thousands of more fun occasions in the future for individuals that scan your site.

  11. I am only commenting to make you know what a brilliant discovery my wife’s princess gained reading your web page. She noticed too many issues, with the inclusion of what it’s like to have a great giving style to make many people really easily know precisely some advanced matters. You really did more than her expected results. I appreciate you for imparting these informative, trustworthy, edifying and in addition fun guidance on this topic to Kate.

  12. I’m just commenting to make you understand of the beneficial encounter my girl enjoyed checking your blog. She came to find so many issues, which include how it is like to possess an incredible teaching nature to get many others without difficulty learn about selected advanced subject areas. You actually did more than her expected results. Thanks for giving such powerful, safe, explanatory not to mention unique thoughts on the topic to Ethel.

  13. I would like to get across my passion for your kindness supporting persons who should have help with this important area. Your real commitment to passing the solution all through appeared to be extremely good and have always helped many people just like me to achieve their targets. Your own insightful help signifies much to me and far more to my fellow workers. Many thanks; from all of us.

  14. I am also commenting to let you know of the perfect experience my cousin’s daughter enjoyed viewing yuor web blog. She mastered so many things, most notably what it is like to have an excellent helping heart to get a number of people really easily fully understand several multifaceted issues. You actually exceeded my expectations. I appreciate you for producing those warm and helpful, safe, edifying and in addition fun tips about that topic to Evelyn.

  15. I wish to express my appreciation to this writer just for rescuing me from this type of problem. Right after surfing around through the search engines and finding solutions that were not productive, I assumed my life was over. Living minus the answers to the problems you have sorted out as a result of your post is a serious case, and the kind that might have adversely damaged my entire career if I had not come across your web blog. The ability and kindness in controlling every part was excellent. I don’t know what I would have done if I hadn’t discovered such a solution like this. It’s possible to at this time look forward to my future. Thank you so much for the skilled and sensible help. I won’t think twice to recommend the website to any person who wants and needs support on this situation.

  16. I have to get across my admiration for your kind-heartedness in support of men and women that absolutely need guidance on the field. Your special commitment to getting the solution up and down appears to be certainly useful and have regularly empowered individuals just like me to arrive at their targets. Your new important guideline indicates so much a person like me and much more to my peers. Best wishes; from everyone of us.

  17. Needed to create you that tiny remark to be able to thank you so much the moment again for these nice solutions you’ve discussed on this page. This is quite surprisingly generous of you to supply easily what a few people could have offered for sale as an ebook to end up making some profit on their own, primarily since you could have tried it if you considered necessary. The advice additionally acted as the easy way to fully grasp that other people have similar eagerness the same as my very own to know the truth good deal more on the subject of this condition. Certainly there are a lot more pleasurable instances in the future for individuals who see your website.

  18. Thank you so much for giving everyone an extraordinarily terrific chance to read critical reviews from this website. It’s always very cool and as well , full of a good time for me and my office acquaintances to search your site at the least three times in 7 days to study the latest tips you have got. Not to mention, we are always contented with your perfect creative ideas you serve. Some 2 facts in this article are in fact the most suitable I’ve had.

Comments are closed.