June 24, 2016 6:00:31 am

Why is my contract so long?

By Brandy Natalzia

Brandy E. Natalzia – Otis, Bedingfield & Peters, LLC

“The time to repair the roof is when the sun is shining.”- John F. Kennedy

You entered into a pretty basic commercial deal and decided to do things properly and get it drawn up by an attorney. You receive a ‘draft’ from the attorney and it’s long. It was a simple deal so why are there so many terms? The answer lies in risk-shifting, or preparing for the rain.

There are many ways a contract can be drafted to guard against the rain – two of which are representations and warranties and indemnity provisions. A representation is a statement of fact upon which another party is expected to rely, while a warranty is a party’s assurance as to a particular fact coupled with an implied indemnification obligation if that fact is false. An indemnification clause is a promise to protect and defend another in the event a particular set of circumstances leads to a loss suffered by another party.

Having an attorney draft or review your contract before signing is recommended. You need to understand the potential consequences of risk-shifting provisions in any contract. By carefully drafting and negotiating a contract before execution, during the good times, you can best protect yourself or your company from the inevitable rain.