Contracts are one of the most fundamental tools protecting a business’s interests, but they only genuinely protect a business if properly understood before signing, not treated as a formality to get through quickly to close a deal.
These are the fundamentals worth understanding about handling contracts properly.
Read and genuinely understand every term before signing
Signing a contract without genuinely reading and understanding every clause, not just the headline terms, is one of the most common ways entrepreneurs end up bound to obligations they didn’t intend to accept.
Asking for clarification on any unclear clause before signing is always better than assuming a favourable interpretation that may not hold up later.
Ensure the contract genuinely reflects the actual agreement
A contract should accurately capture what was actually agreed between the parties; discrepancies between the verbal understanding and the written contract need to be resolved before signing, not assumed to be minor or unimportant.
Verbal promises not reflected in the written contract generally carry far less legal weight if a dispute arises later.
Understand the genuine consequences of breach and exit
Knowing what happens if either party doesn’t meet their obligations, and what the process and cost of exiting the contract early looks like, matters as much as understanding what’s promised when everything goes well.
This is particularly important for longer-term or higher-value contracts where the cost of an unfavourable exit clause can be significant.
Get proper legal review for significant contracts
For contracts involving meaningful value or long-term commitment, having a qualified attorney review the terms before signing is worth the cost relative to the risk of an unfavourable or poorly understood agreement.
Verifying that an attorney is properly admitted and in good standing through the Law Society of South Africa is a genuine, worthwhile check before engaging one.
Frequently asked questions
Should every clause of a contract be read before signing?
Yes, not just the headline terms; this is one of the most common ways entrepreneurs accept unintended obligations.
What if a contract doesn’t match the verbal agreement?
Discrepancies need to be resolved before signing, since verbal promises generally carry far less legal weight in a dispute.
What should be understood beyond the contract’s main promises?
The genuine consequences of breach and the process and cost of exiting the contract early.
When is legal review of a contract worth the cost?
For contracts involving meaningful value or long-term commitment, relative to the risk of an unfavourable agreement.
Are contracts only relevant for new business owners?
No, they matter for entrepreneurs at any stage, and become more complex as a business grows.
Further reading
Originally published in 2024. Updated September 2026 into a general, principle-based guide to handling contracts, reframed from a single attorney’s quoted advice.
