Here’s why it matters more than you think.
We know what you’re thinking. You’ve already had and paid for the legal review. The negotiations are done. Everyone’s ready to go. The last thing you want is another invoice for someone to read a document you’ve already read three times.
We get it. And most of the time, that final check doesn’t happen. Clients make a commercial call, sign, and move on.
However, here’s something our experienced in-house counsel, Jo Osborne, dealt with recently for a client.
The situation
A client was at the end of a contract negotiation with a customer. We’d done a full review, redlined the agreement, rewritten some fundamental clauses and tightened up the commercials. The client sent the revised version across to its customer. The customer came back with what they described as their “latest version.”
No redline. Clean document. Ready to sign.
My client forwarded it to me for a final check before signature. “Just a quick look,” they said. “I think we’re basically there.”
We weren’t.
What had actually happened
The customer had not sent a redline. They had sent a clean document that looked, on its face, like the agreed version. But when compared against what had been sent to them, it was a completely different agreement.
Not tweaked. Not minor adjustments. Fundamentally different on almost every clause that mattered.
Here’s some of what had changed, silently, without a single tracked edit:
Intellectual property rights – entirely reversed. We had rewritten the IP clause so that our client owned its own work product which is critical for the sort of business it is. The customer’s ‘latest’ version had reverted to a full work-for-hire assignment, requiring our client to irrevocably transfer all intellectual property rights in everything it produced, including copyright in content our client didn’t even own. Had this been signed, our client would have assigned rights it couldn’t legally give, exposing itself to copyright claims from third-party publishers.
Termination for convenience – reinstated. Subscription revenue is sacrosanct to a lot of our clients. This client was no different. We had deleted the customer’s right to terminate for any reason on 15 days’ notice. That deletion had been silently reversed. Under the customer’s ‘latest’ version, they could have walked away after a month, paying only for what had been delivered. The minimum commitment, the entire commercial basis of the deal, would have been worthless.
Indemnity – brought back from the dead. We had deleted a broad, one-sided indemnity clause in its entirety. It was back. In full and with no cap. Our client would’ve had an open-ended obligation to pick up the full bill for certain losses, which was not a fair allocation of risk.
There was much more but you get the idea.
Was it deliberate?
We genuinely don’t know. It’s possible their legal team worked from the wrong base version. It happens. However, we can’t rule out that it was intentional. And, here’s the uncomfortable truth: it doesn’t matter. The effect is the same either way. If our client had signed, they would have been bound by terms they had never agreed to and had specifically negotiated out.
They also had pressure to sign quickly, the contract start date was the following day so that made it worse. Urgency is one of the oldest tools in the book for getting people to skip the final check.
What would have happened if the client hadn’t asked us to look?
They would have signed and as a result, our client would have:
😱assigned IP rights they couldn’t legally assign,
😭 lost their minimum fee/ongoing revenue stream entirely, and
🫣 taken on much greater risk in the whole deal, with effectively having to write a blank check if things went wrong.
The frightening bit is that they would have had no idea, because the document looked clean. It only bites when something goes wrong.
The practical takeaway
Not every contract may need a full legal review at every stage. That’s not realistic, and it’s not always proportionate, but if the deal is sufficiently important and of significant enough value and you’ve obtained legal advice, been through a negotiation, sent a revised version, and the other side comes back with a “clean” document, especially under time pressure, please ask someone to check it against what you sent, or do it yourself. Here’s a tip – Microsoft has great tools for this (MS Word’s ‘Compare Documents’ tool).
It doesn’t have to take long. For lower impact deals, a targeted comparison of the key clauses such as IP, liability, termination, payment, governing law can also be done quickly if you know what you’re looking for.
The cost of that check is a fraction of the cost of unwinding a signed contract, or worse, living with one that doesn’t protect you at all.
Our client asked. It made all the difference.
A strong contract process doesn’t stop at negotiation. We support businesses at every stage – from reviewing contracts and negotiating better terms to carrying out pre-signature reviews and putting practical signing processes in place so the right document gets signed. If you need help with your contract process, get in touch.
