Don't Read The Contract!

If someone asks you to take a first look at a contract, the worst thing you can do is sit down and read it.

Here’s why.

1. A contract is never neutral. It always sets out someone’s agenda. Because you didn’t write the contract, the agenda it’s setting out is not yours. You’re immediately looking at the deal from the other side’s point of view.

2. Most of a contract is trees, not wood.  Without your own agenda to guide you, you will inevitably get lost in the trees. What do I mean by trees? In a 50-page contract, there’s usually a page and a half of content that sets out the key elements of the deal: that’s the wood. The rest of the contract is there to make the contract work and to address outlier issues, but it’s not critical to the deal. That’s the trees.

But once you get lost in the trees then, by definition, you can’t see the wood from the trees. You’ve lost your bearings.

Here's the right way to look at a contract.

1. Put the contract to one side. Don’t look at it.

2. Find somewhere where you won’t be disturbed for 30 minutes.

3. Think about the deal that the contract is intended to represent. What are its key business elements from your point of view? Note that I said business elements, not legal elements. The legal expression is secondary to (and an offshoot of) the business expression. Until you have a clear business view of the deal you are contemplating, it’s not worth trying to form a legal view.

4. Write a summary (note form) of the deal from your point of view. That’s your agenda.

5. Go back to the contract and see to whether it meets your agenda.

And that’s it – the right way to take a first look at a contract.