Contract Negotiations - Avoid the pitfalls

Contract negotiations: key issues for businesses

A recent Court of Appeal decision illustrates the dangers for businesses of relying on conversations and unsigned draft agreements.

The parties in this case were involved in discussions regarding events management at a venue. During the negotiations, a draft agreement was produced, which included a two-year fixed term and a clause allowing termination on three months' notice.

After one meeting, various drafts of the agreement passed between the parties that contained a three-month notice provision, but nothing was signed. The parties argued about whether the contract could be terminated during the two years. The court held that the parties had concluded an oral contract for a two-year period but it could be terminated early on three months' notice.

Both parties spent time and money litigating the matter. The case underlines the importance of ensuring that key contractual provisions are always documented, especially those as fundamental as a termination right.

This checklist highlights the key issues a business should consider when negotiating contracts.

For further information, please contact our Business Law Team.

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