Why its important to read the fine print in contracts

Navigating contracts is a task SMEs are usually faced with daily. And as important as it is, reading the fine print can be a headache to many.

Contracts with employees, service providers or clients are binding agreements between the parties within which the expectations, terms and costs of the agreement are explicitly stated.

Greer Penzhorn, Lula’s Head of Legal, says the ‘nitty gritty’ is often overlooked, and overlooking it can have a detrimental impact on a business. If an SME owner prioritises the operation of thriving business, they will know the importance of understanding the small print.

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The importance of contracts

Penzhorn says the terms of the written agreement will be upheld in the South African courts. Signing any contract means one understands and agrees to the terms and conditions. “It is better to take the time to unpack the small print and ensure that anything that seems unclear or unfair is negotiated before signing the final contract.”

Business owners usually rely on verbal discussions and assurances provided by the other party, just to avoid going through the fine print. Thus, they end up simply signing a contract without reading it, especially if they have done business with the person before.

“The small print is frequently hard to find, hard to read and hard to understand, but ignoring or neglecting it may end up causing an expensive headache for the SME owner.”

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Most of SME owners dread going through pages of legalese.

Tips for dealing with small print:

• Ask questions and engage with the other party to make sure that both parties are on the same page and having these discussions in writing over email will be helpful when interpreting a contract.
• Make sure every agreement is worded. These can be plainly worded agreements without the unnecessary, and often misunderstood, legalese. 
• Negotiate and effectively communicate with the other party – you have a right to only agree to terms you feel comfortable with.
• Take time to understand the small print; especially if you feel unreasonably hurried by the other party.
• If in doubt, contacting someone for assistance is recommended. Get a legal advisor, this will be cheaper than dealing with hidden fees, a dispute or legal claim because of small print that was either missed or misunderstood.