A contract can look straightforward right up to the point it creates a cost, obligation or risk you did not expect. The best questions before signing a contract are not about slowing down a deal for the sake of it. They are about making sure you know precisely what you are agreeing to, what could go wrong and what practical options you have if it does.
For NSW individuals and businesses, this applies to far more than major commercial agreements. It may be a building contract, lease, employment agreement, supplier terms, shareholders agreement, loan guarantee, settlement deed or contract for the sale or purchase of property. The document may be standard form, but the consequences are rarely standard.
Start with the commercial purpose
Before focusing on the legal wording, ask: What is this contract meant to achieve, and does it actually reflect the deal we discussed?
This sounds basic, but misunderstandings often begin here. A business owner may believe they are appointing a supplier for a short trial, while the written agreement locks them into a 12-month minimum term. A buyer may assume inclusions are part of a property purchase, only to find they are excluded by the contract or subject to a separate arrangement.
Check that the parties are correctly identified, the services, goods or property are described accurately, and any promises made during negotiations are included in writing. If a point matters to your decision, do not rely on an email, sales brochure or verbal assurance unless the contract clearly records it.
What exactly am I required to do?
A contract should make your obligations clear enough that you can comply without guesswork. Ask what you must do, by when, and to what standard.
For example, a service agreement may require you to provide information, approvals, access to a site or equipment by set dates. A lease may make you responsible for repairs, insurance contributions or fit-out approvals. A construction contract can impose notice requirements that affect your right to claim extra time or challenge defective work.
Pay close attention to words such as “must”, “reasonable”, “promptly”, “material”, “best endeavours” and “at discretion”. These phrases can carry significant legal effect, particularly where the contract does not explain how they will be applied. If the obligation is broad or uncertain, ask whether it can be narrowed or defined.
Are there deadlines, conditions or notice requirements?
A missed deadline is not always fatal, but it can be. Some agreements make time essential, meaning delay may allow the other party to terminate. Others require formal written notice within a strict timeframe before you can make a claim, seek an extension or raise a dispute.
In a NSW property transaction, dates for cooling-off, finance, building inspections, exchange and settlement need careful attention. In commercial contracts, renewal notice dates and milestone dates can be just as important. Put key dates in your calendar before you sign, not after a problem arises.
What will this really cost?
The headline price is only one part of the financial commitment. Ask whether the stated amount includes GST, delivery, professional fees, disbursements, insurance, maintenance, interest, administration charges or other additional costs.
If the price can change, find out how. Is there an annual increase? Can the supplier raise its rates on notice? Is the increase tied to CPI, market rent, a fixed percentage or another formula? A clause allowing one party to vary pricing at its discretion deserves close scrutiny.
You should also ask when payment is due and what happens if there is a delay. Late-payment interest, debt recovery costs and suspension rights can become expensive quickly. For a business, confirm that payment terms align with cash flow and that an invoice dispute process is available.
Who carries the risk if something goes wrong?
One of the most useful questions before signing is: If there is a loss, delay, defect or dispute, who pays? The answer may be spread across clauses dealing with liability, indemnities, insurance, warranties and force majeure.
An indemnity is a promise to compensate another party for certain loss or liability. It can be reasonable in some circumstances, but it should not leave you responsible for losses outside your control or for the other party’s own negligence. Consider whether the indemnity has a financial cap, whether it applies only to direct loss, and whether you have insurance that responds to the risk.
Liability limits also require context. A low cap may be acceptable for a low-value, short-term arrangement. It may be inadequate where a supplier has access to confidential information, critical systems or a valuable premises. The balance should reflect the commercial reality of the deal.
Is the contract fair if the other party does not perform?
Check the remedies available to you. Can you withhold payment for incomplete work? Require defects to be rectified? Terminate for repeated breaches? Recover direct losses caused by a failure to perform?
Then compare those rights with the other party’s rights against you. Standard-form agreements sometimes create an imbalance: one party can suspend services, alter terms or terminate easily, while the customer has limited options even where performance is poor. Depending on the circumstances, unfair contract terms protections under the Australian Consumer Law may be relevant, particularly for consumers and small businesses. However, it is safer to identify and address an unfair clause before signing than to rely on a later dispute.
Can the contract change without my agreement?
Variation clauses deserve more attention than they often receive. Ask whether either party can change the scope, price, specifications, policies or timetable, and whether your written approval is required.
A well-drafted contract should set out a clear variation process. This is particularly important for building works, consulting arrangements and supply contracts, where informal conversations can lead to arguments about whether extra work was authorised and what it should cost.
Also check the order-of-precedence clause where there are multiple documents, such as a quote, proposal, purchase order, specifications and general terms. It should be clear which document wins if there is an inconsistency.
How do I get out of the contract?
No one signs an agreement expecting it to fail, but an exit clause is often where the real risk sits. Ask whether the contract has a fixed term, renews automatically or continues until terminated. If it renews, find out how much notice you must give to stop the next term.
You should understand the difference between terminating for breach and terminating for convenience. A termination-for-convenience clause may let a party end the arrangement without proving fault, but it may also require notice, payment of committed costs or an early termination fee.
Ask what happens after termination. Are you required to return confidential information, hand over work product, remove equipment, pay outstanding amounts or continue meeting certain obligations? Restraint clauses, non-solicitation provisions and confidentiality obligations may survive the end of the contract.
Are disputes governed by NSW law, and where will they be resolved?
For Sydney and NSW clients, a governing-law and jurisdiction clause is not just legal housekeeping. It can affect cost, convenience and the process for enforcing your rights.
If an agreement requires disputes to be dealt with interstate or overseas, consider whether that is commercially workable. Also ask whether the contract requires negotiation, mediation, expert determination, arbitration or court proceedings. A staged dispute-resolution process can be helpful, provided it does not prevent urgent action where it is genuinely needed.
For property and development matters, contractual rights also need to be considered alongside NSW planning controls, council requirements, strata rules, finance conditions and relevant legislation. A contract cannot make a proposed use lawful simply because both parties agree to it.
Have I received enough time and advice to decide?
Pressure to sign quickly is not always improper, but it is a reason to pause. Ask whether there is a cooling-off period, a finance condition, a due diligence period or another mechanism that gives you time to confirm the facts.
Do not assume a cooling-off right applies. Its availability and effect depend on the type of contract and the circumstances. Contracts can also include clauses stating that you obtained independent advice or understood the terms. Do not sign those statements unless they are true.
A practical legal review focuses on the points that matter to your transaction: price, risk, timing, exit rights and enforceability. GKE Lawyers can provide clear NSW-based advice on proposed contracts and explain where a clause may need negotiation, clarification or a different commercial approach.
The right time to ask questions is while you still have the option to change the terms or walk away. Once the contract is signed, your bargaining position is usually very different.
