contract risk

Ten Things: Minimizing Risk in Commercial Contracts

After “will I go to jail for that?” the most common question asked of in-house counsel typically involves commercial contracts and whether “it’s okay for us to sign this?”  There are multiple parts to this seemingly simple ask, but the core of the question has to do with risk.  More specifically, if we sign this contract are we taking on an unacceptable level of risk?  Risk too is subject to multiple meanings.  Are we talking about commercial risk, legal risk, financial risk, reputational risk, or what?  Regarding the many facets of the question, it’s typically the in-house lawyer’s job to come up with the answer.  Unfair or not, because lawyers are trained issue-spotters, the analysis of risk in commercial agreements and the process of minimizing that risk usually falls in the lap of the in-house legal department.  Unfortunately, the process of spotting and analyzing risk is rarely black and white.  It’s generally highly subjective and it’s not always right.  Over the course of many years, I have learned about – or come up with – a number of ways to minimize risk in commercial agreements.  This edition of “Ten Things” will walk you through some of the best ways to do so: