The top 5 things to know about your contract!

Entering into a contract is often an exciting time for you or your business. However, it is important to know exactly what you are getting into. Reviewing your contract prior to signing can help you understand what is expected of both parties to avoid misunderstandings down the track. Here are our top five things you need to know and understand about your contract.

  1. Obligations under the contract

To avoid confusion, it is important for a contract to include a detailed description of the agreed work or service to be provided.  It should clearly outline what work is to be done and when, as well as the money you will be paying (or receiving). Understanding both your obligations and the obligations of the other party is a crucial step before agreeing to a contract.

  1. Termination of the contract

Most contracts include an express clause that allows for one party to end the contract even if the contract has not yet been completed. Some agreements may also be expressed to terminate automatically in certain circumstances, such as with the passage of time or a breach of duty.  Termination rights should ideally be exercised by written notice to the other party, so it is important for you to identify any specified notice periods, as well as any obligations that survive termination.

  1. Warranties

Warranties are used to describe terms of a contract, but are less significant or fundamental than the conditions of a contract. A warranty is a guarantee that a factual statement is correct.  A breach of a warranty will not entitle a party to terminate, however it can allow a party to seek damages. It is useful to note that some warranties may appear reasonable when in fact they are not.

  1. Indemnities

An indemnity is a promise by one party to compensate the other party for loss or damage suffered during the contract period.  Indemnity clauses involve allocating risk between the parties, typically from the hirer to the contractor. It is essential to carefully consider whether the risk you’re agreeing to is within your control. If not, we recommend you seek professional advice before signing.

  1. Limitations and exclusions of liability

It is common for a party to use liability and exclusion clauses to limit their legal responsibility in contracts, or to limit the other party’s rights or remedies. For example, a contractor can use a limitation clause to reduce the amount of money it would have to pay in compensation.  Prior to signing your contract, you should identify (and aim to protect yourself from) the aspects of your business or service that present risk. It is worthy to note that you cannot limit your liability entirely as the court has the power to overlook clauses that it holds unfair. 

Contact our construction lawyers now to discuss your options in a no-obligation consultation with the experts. We will guide you, step by step and ensure the best possible outcome for your circumstances.  Call our Brisbane lawyers on (07) 3009 8444 or our Sydney lawyers on (02) 9307 8900. Alternatively, contact us to get started.

The blog published by Rostron Carlyle Rojas is intended as general information only and is not legal advice on any subject matter. By viewing the blog posts, the reader understands there is no solicitor-client relationship between the reader and the blog publisher. The blog should not be used as a substitute for legal advice from a legal practitioner, and readers are urged to consult RCR on any legal queries concerning a specific situation.


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