A legal eagle's guide to reading a contract

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Signing a contract can be intimidating, and it’s hard to know where to start and what you should be looking for.

To quote Ben Wyatt in Parks and Rec: “A person should not have to have an advanced law degree to avoid being taken advantage of by a multibillion-dollar company,” yet this is what it can feel like when you’re trawling through the fine print.

So, we asked Pavanjit, who does have an advanced law degree and works in our Legal team, to help you navigate the legalese next time you need to read and sign a contract.

Take your time

You might feel like you’re on the clock when there’s a document in front of you that you need to sign – especially if you’ve got someone else watching you do it. There is nothing stopping you from taking the document away and processing it in your own time and in your own space.

Read it more than once

It can be hard to take in all the information straight away, given how some contracts are structured. They’re not like a book that you can read from start to finish and the information unfolds as you go, so it’s worth doing a skim-read first to make sure you know how the document is structured and where the important information is.

Then read it through again, this time making note of any questions you have or things you aren’t clear on. The person or company you are signing the agreement with should be able to answer any questions you have, no matter how obvious they may seem to you.

But what do you need to pay attention to when you are reading it through again…?

What are you agreeing to?

A contract is just a documented exchange of goods or services between two parties, so this basically underpins the entire system – what are you agreeing to do in exchange for something else. A contract is supposed to protect both parties from being wronged by the other, which is why it’s critical that you can do whatever it says in the contract.

This means it works both ways. If a company has agreed to provide you with a minimum internet speed, then you have a right to receive that based on the terms of the agreement. 

It’s important that you understand not only your responsibilities, but your rights too before you sign anything.

What is the “real” cost?

This is where it’s easy to get caught out, especially with offers or deals that are designed to trick you. Are there extra costs for late payment? Is there an additional saving if you choose not receive paper statements?

It can be easy to rack up huge costs if you don’t know when, how or why you can be charged for something, and if it’s in contract then you are required to pay up!

How long is the contract for?

Again, it might seem basic but it’s important to know how long you are getting into what you are getting in to. 

Is the free trial period only if you sign up to a 12-month plan? Are you going to be stuck with an outdated model of something because you’ve agreed to a 4-year plan? How long is a price fixed for? What might seem like a good deal on the surface may not be when you look more closely.

How can you end the contract?

Changing providers is a good way to save money on various household costs, so knowing when and how you can get out of a contract is critical. There’s no point changing to a different energy supplier if the amount you save is going to be less than the cost of early termination.

Some providers will ask for a notice period before you can end your contract early too, so if you know you’re going to be moving to a new house or switching providers, serve notice as early as you can to avoid paying multiple costs. 

And make sure you know what happens at the end of the contract. Some agreements may go straight into a month-month rolling agreement at a higher cost than you initially signed up for, but still require you to give a termination notice period.

Don’t sign unless you’re sure

You don’t need to sign anything you aren’t comfortable with or if you still have open questions about. Contracts are a binding legal document, so it’s always better to check, check and triple-check anything that raises a flag for you.