Contracts are the backbone of
any business relationship.
Whether you're hiring a supplier, entering a partnership, or signing a lease, the fine print matters. A strong contract sets clear expectations, protects your interests, and helps things run smoothly. A weak one?
That’s where risk, confusion, and unexpected costs can creep in. We often see businesses run into trouble not because they didn’t have a contract, but because the contract wasn’t clear, balanced, or fit for purpose.
6 things to consider before you sign:
1. Clarity is key
Vague terms like “reasonable effort” or “as soon as practicable” might sound harmless, but they leave too much room for interpretation. If it’s not clear, it’s open to dispute! Make sure your contract spells out exactly what’s expected: who’s doing what, when, and how. The more precise the language, the less chance of misunderstanding down the track.
2. Know your way out
Every contract should include a clear exit strategy. Without proper termination clauses, you could find yourself stuck in an arrangement that no longer works for your business. Look for details around notice periods, early termination rights, and what happens if things go wrong.
3. Watch for hidden liabilities
Some contracts include indemnities, unlimited liability, or personal guarantees that can expose you to more risk than you realise. These clauses can have serious financial consequences, especially if something goes wrong. Before you sign, make sure you understand what you’re actually agreeing to, and what you could be held responsible for.
4. Be clear on IP and confidentiality
If your business is creating content, designs, software, or other intellectual property, make sure the contract spells out who owns what. Confidentiality, protecting your trade secrets, client data, and other sensitive information is essential. This is especially important under the Privacy Act 2020, which sets clear rules around how personal information is collected, stored, and shared.
5. Understand the legal landscape
In New Zealand, certain laws apply whether they’re mentioned in the contract or not. For example, the Consumer Guarantees Act 1993 and Fair Trading Act 1986 may still protect your customers, even if your contract says otherwise. If you’re contracting with individuals or providing goods and services to the public, it’s worth checking how these laws apply.
Also, make sure your contract specifies that New Zealand law governs the agreement and that any disputes will be resolved locally. If the other party is overseas, this helps avoid confusion and costly jurisdictional issues.
6. Don’t forget force majeure
If events beyond your control, like natural disasters (which New Zealand has had a fair few of recently) or pandemics, could impact your ability to deliver, make sure your contract includes a force majeure clause. These aren’t automatically implied, so they need to be written in.
Practical tips for Business Contracts
- Always get contracts reviewed before signing.
- Don’t be afraid to negotiate—it's easier (and cheaper) than fixing problems later.
- If something matters to your business, make sure it’s written down.
A Final Thought
Strong contracts don’t just protect your business; they give you peace of mind. They help you build better relationships, avoid surprises, and stay focused on what you do best. If you’re unsure about a contract or want help reviewing one, our team is here to make the process simple and straightforward.
At Willis Legal, we’re always ready to listen, ready to explain, and ready to help!
