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Companies admit failing to read business contracts

A MAJORITY of businesses fail to read or fully understand legally binding contracts before signing, a survey of company bosses in Aberdeen has found.

The survey was issued by commercial lawyer Peter Murray, partner at Ledingham Chalmers, and when returned saw 100% of respondents admitting to having failed to comprehensively check all of their contracts and having not always fully understood all of the details before signing.

The news comes just a week before Offshore Europe where a significant amount of business deals are made when thousands of firms from across the world descend on the city for the three-day conference and exhibition.

"Laws abroad can be vastly different from here in the UK and without a full understanding of the commitment you are making, could make doing business extremely challenging and in some cases quite damaging," says Murray.

"There can be no room for complacency when dealing with contracts, no matter what the location. Even companies in the UK who feel they are fully up to date with legislation and regulation should always read the fine print when accepting a contract."

Murray says the definition of "group companies" is an example of an area where issues can arise.

"There is a common assumption the phrase means all companies under common ownership however, particularly with the largest businesses, the term can often refer to a smaller number of companies.

"For the unwary this could lead to a weaker and narrower contract than expected."

The survey was completed by 75 delegates at a seminar, focussing on contracts and associated issues, held by Aberdeen Entrepreneurs in the city in the final week of August.

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