Legal analysis of the contract

Jan, 14 2021

Russian law defines a contract as an agreement between two or more parties. This agreement necessarily creates, transforms or cancels the rights and obligations between those who signed the contract. In other words, a contract is a type of civil transaction.

As a rule, the transaction assumes that one of the parties acquires the so-called right of claim. Meanwhile, the second party of the agreement undertakes to satisfy this right. Russian laws recognize the freedom of citizens to enter into transactions, but at the same time impose some restrictions. For example, a contract is declared invalid if it violates legal requirements or its terms contradict the law. That is, an agreement that involves violation of law by the parties to it is automatically considered invalid.

Analysis and examination of contract: what is the difference?

By its nature and requirements, legal analysis of the contract is similar to legal examination of the contract. How does this manifest itself? First, the main purpose of legal analysis is to check the contract for its compliance with necessary requirements of civil law. Secondly, legal analysis allows you to identify all visible and hidden drawbacks of the contract, helps to analyze the terms of the document from the point of view of their favorability for the client, who acts as a party to the transaction.

Thus, legal analysis of the contract and legal examination of the contract as a whole are identical procedures. The only difference is that the examination is a broader concept, and in most cases the subject of its conduct is not only the direct provisions of contract, but also the verification of counterparties. 

Tasks and objectives of analysis

So, why is it extremely necessary to conduct legal analysis of contract before entering into almost any transaction? The answer is simple: highly qualified and professional legal analysis of contract is the key to successful implementation of business activities and functioning of the company as a whole. Analysis of the contract allows you to avoid adverse consequences, occurrence of which is extremely predictable if the contract is concluded on unfavorable and even fraudulent terms.

Moreover, majority of citizens and even companies do not pay due attention to the legislative regulation of contractual relations, that is why there is a significant risk of making a mistake when concluding a contract, because certain rules may become outdated and not be applied in practice, what, in turn, may lead to the recognition of the contract as invalid in future. It is the expert who faces the task of preventing such situations.

So, let us look at some risks that can be identified during legal analysis of the contract:

  • The agreement does not contain any material terms, so it cannot be considered concluded.
  • The agreement contains provisions that contradict the current legislation, which leads to its invalidation, and in addition, to the liability of the parties.
  • The contract is subject to mandatory registration, otherwise it cannot be considered valid.
  • One of the parties to the agreement does not have the authority to sign the papers. For example, instead of the director of the company, the contract is signed by the secretary.
  • The document contains provisions that infringe on the rights and interests of one of the parties, which can lead to moral and material losses, as well as litigation in future.
  • The agreement contains controversial or vague language that may lead to different interpretations and legal disputes.
  • The agreement contains other risks that must be considered before signing the agreement.

Thus, a well-written contract is the key to successful achievement of company’s goals. In addition, contract can protect the party from unfounded accusations and claims on the part of counterparty, that is, protect against any problems related to the performance of the contract in future.

How to draw up an expert opinion

Based on the results of legal analysis of the contract, specialist prepares an expert opinion with all his comments and corrections that the client should take into account. Such an opinion may be presented orally or in writing with the expert’s recommendations.

In addition, the client can simply receive the final contract with all corrections and recommendations taken into account. This course of events is the most effective, as the client receives a ready-made contract that fully complies with legislation and meets all the requirements and wishes of the parties.

Essential elements of legal analysis of the contract are:

  • verification of the contract for compliance with established requirements of current Russian civil legislation;
  • analysis of current judicial practice on disputes related to the relevant legal relationship;
  • clarification of legal meaning of the terms and conditions contained in the analyzed agreement;
  • identification of provisions in the contract that infringe on the interests and rights of the interested party, as well as entail any negative consequences;
  • inclusion in the analyzed contract of terms and conditions that will ensure protection of legitimate rights and interests of the interested party.

To sum up, professional analysis of contract is an integral and necessary part of any kind of transaction, which helps to significantly reduce the risks of adverse consequences. Such consequences usually include recognition of contract as invalid, occurrence of legal disputes, additional financial costs, loss of the counterparty, and the like.

Author of the article

Legal analysis of the contract
Roman Matyushekov
Lawyer

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