Why does legal review matter before a contract is signed?

Legal assistance is usually sought after a problem has arisen. Yet the greater part of contractual disputes is already determined at the moment the text is signed. What can be done after signature is a small fraction of what could have been done before it.

The reason is straightforward: signature shifts bargaining power to the other side. Changing a clause before signature is a matter of one sentence. Changing the same clause afterwards requires the counterparty’s consent, usually a price, and sometimes litigation.

The five gaps most often seen in practice

1. No time limit is stated. Where there is no firm date for delivery, payment or performance, an argument about what is a “reasonable period” begins. In the end a judge decides what is reasonable.

2. The consequence of delay is not stated. If the position on delay is not regulated, the burden of proving the existence and amount of loss falls on the party suffering it. Where liquidated damages have been agreed, that burden disappears.

3. There is no standard for defective performance. Expressions such as “the work shall be carried out properly” are not a standard. If the quality required is not written down, the dispute is left to the discretion of an expert witness.

4. Termination is not regulated. Where it is not settled who may terminate, in which circumstances, how and within what period, the parties are left trapped inside the relationship.

5. It is unclear where a dispute will be resolved. Without a jurisdiction or arbitration clause, where proceedings may be brought becomes a preliminary issue in its own right. Where there is a foreign element, the governing law must be determined as well.

What a pre-signature review covers

A pre-signature legal review is not a matter of reading the text through and pronouncing it acceptable. In practice it covers:

• verification of the parties’ capacity and authority to represent — is the person signing actually authorised?
• the mutual balance of the obligations and the clarity of the standards applied to them
• how risk is allocated between the parties
• mandatory formal requirements — some contracts are void if not made in the required form
• identification of clauses contrary to mandatory provisions
• whether rights arising from statute, though not written into the contract, are preserved

The output of that work is usually two documents: a marked-up text carrying proposed amendments, and a short note explaining the reason for each.

Formal requirements: the silent cause of invalidity

In Turkish law certain contracts are not valid unless made in the form prescribed by statute. The parties may act for years on the assumption that the contract is valid; the invalidity emerges only when a dispute arises.

A contract for the sale of immovable property is made in official form. That form may be satisfied in two ways: by an official deed executed at the land registry office, or by a contract of sale of immovable property executed before a notary. The second route has been available since 1 January 2023 under Article 61/A added to the Notaries Act; registration of a contract concluded before a notary is carried out through the same procedure.

Matrimonial property agreements are made before a notary, by way of drafting or attestation, and construction contracts in return for a share of the property are made in official form. Where these requirements are not met, the result does not change however clear the parties’ intention may have been.

The question of standard-form contracts

A ready-made text produced by the other side is written in that side’s interest. This is not a defect; it is natural. The problem is the assumption that the text is not open to negotiation.

In practice a significant proportion of standard-form contracts can be amended; often the counterparty keeps a clause fixed simply because no one has ever asked for it to be changed. Distinguishing which clause is genuinely immovable from which is open to negotiation is part of the review.

A comparison of costs

A pre-signature review appears as an item of expenditure, while a dispute is an invisible risk. Yet litigation consists of more than court costs: time, the burden of gathering evidence, damage to the commercial or personal relationship, and the uncertainty of the outcome are all part of the cost.

The real function of the review is to make that uncertainty visible before signature.

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This article is provided for general information purposes and does not constitute legal advice. Assessment of a specific contract requires separate examination.