On a regular basis, SME owners have to navigate legal contracts in order for their businesses to operate, and those who prioritise the operation of thriving businesses know the importance of understanding the small print within those contracts.
In the same way that people dislike trips to the dentist or flossing daily, but agree that toothache is best avoided, reading the small print may seem like an unnecessary nuisance or waste of time, but not doing so can have the potential for significant impact on a business.
The Importance of Small Print in Agreements
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.
Whether SMEs enter into contracts with employees, service providers or clients, the contracts constitute binding agreements between the parties within which the expectations, terms and costs of the agreement are explicitly stated.
The terms and conditions outside of the material reason for the contract, that is, not just the provision of services or delivery of goods, is usually referred to as the small print.
According to Lula’s Head of Legal, Greer Penzhorn, this “‘nitty gritty’ is often overlooked, and overlooking it can have a detrimental impact on a business.
Even though most SME owners understand the importance of contracts in protecting their business and revenue, the prospect of wading through pages of minute legalese inevitably leaves most owners stone cold.
The result is that many business owners tend to avoid the exercise of combing through the small print, simply signing a contract without reading it and relying on the verbal discussions and assurances provided by the other party, especially when entering into contracts with suppliers with whom they have done business for a long time.
Unfortunately, business is business, and when it comes to any disputes, the express terms of the written agreement will be upheld in the South African courts, as signing a contract clearly indicates understanding and agreement on the part of the signatories.
It is better, therefore, 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.
Navigating the small print does not need to be daunting and, as Penzhorn points out, some fundamentals can go a long way to clarifying the terms and conditions of a contract.
5 Dos for Dealing with the Small Print in Contracts
- 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.
- Avoid ‘handshake’ agreements and ensure there are clearly worded agreements in place. These can be plainly worded agreements without the unnecessary, and often misunderstood, legalese.
- Make sure you not only read a contract before signing but also understand the terms set out in that contract. Once an agreement is signed, the signatories are required to comply with all the terms of that agreement.
- 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. Spending the money upfront on a legal advisor will in most instances be considerably less than the cost of dealing with hidden fees, a dispute or legal claim because of small print that was either missed or misunderstood.
Paying close attention to, clarifying and understanding the small print will result in empowering SME owners to manage their businesses more effectively.
Having a better understanding of any agreement and the expectations and responsibilities of all parties as well as protecting the interests of a business and its people means that SMEs can continue to contribute to growing the South African economy without the cost and inconvenience of unnecessary litigation.
Small print may seem inconsequential, but when it is paid attention, it makes a large difference to support and protect your business; and may have you smiling all the way to the bank.
