Contractual Risk Transfer
We enter into contracts everyday for business and personal reasons. A well-written contract is at the heart of any successful business as it can help to manage risk, protect your business and create good working relationships between you and the other contracting party. If a contract is not well drafted, you may be forced to pay for something that is not normally your responsibility. This could result in significant financial hardship for your business.
Every time your business enters into a contract, you should review it and identify any unfavorable terms and conditions. It is important to anticipate any events or situations that could be affected by the contract and negotiate with the other parties on the terms of the contract, in order to transfer as many risks as you can to other parties. You will need to consider:
What are the duties of the parties?
What types of losses could occur?
What is the worst thing that could happen, in terms of financial losses to your business?
What are the tax implications?
Can you allocate the risks?
Risk is generally transferred by contract terms. When you transfer risk, you transfer the obligation to pay for that risk to some other entities. Your ability to transfer risks will depend upon your bargaining power, skill in drafting contracts and the type of contract being contracted. The contract must therefore be well drafted to transfer the risk and to fully protect your business.
We are experienced in advising on contractual issues and have a depth of knowledge and experience in providing guidance and assistance for a wide range of transactions. We also advise on the cross border tax implications of transactions involving overseas entities and where necessary, we obtain opinions and detailed advice from our worldwide affiliates. Our services include:
Drafting rock solid contracts
Evaluating the risks that the agreements present
Developing negotiation strategies
Advising whether to accept the risk or transfer it to another party
Exploring other methods to transfer risks
Reviewing and advising on tax aspects of the documentation prepared