Who should sign a Contract first? This is a question I’ve been asked a number of times, and while it sounds like a simple issue, it can actually have serious consequences.

In my view, the proponent of the Contract (usually the Principal or Client, ie the person carrying out the Project or engaging the other party to provide goods/services) should always sign LAST.

That way they can make sure the Contract:

1. Was actually signed by the Contractor;
2. Was signed properly.

And they can co-ordinate sending copies to all the parties for their records. The last thing you want is to find out 2 years later that the Contract was never signed. Yes, there are sometimes ways around that, but nobody wants that pit in your stomach feeling of wondering if there has been a stuff-up that will cost your business money! How about you: Have you ever been caught out like this? Do you make sure the other party signs the Contract first?

Take this scenario…

The parties have spent months negotiating a contract. It’s ready for execution, the Principal signs the contract in accordance with its policies, the Principal sends the contract to the Contractor for execution, the Contractor tells the Principal that they have signed the contract, and the contract works commence. 10 months later, the Principal’s Contrac Manager realises they never received a copy of the signed contract from the Contractor, they request a copy and the Contractor says they can’t find the signed contract. Doubts arise – was the contract ever signed?

Recommendations

The Contractor should always be required to sign the contract first.

The Contractor should then send the contract to the Principal for execution. This way, the Principal will be able to take copies for its own records and ensure the contract is actually signed (and signed properly) – often the Principal will get its lawyers to check.

This way, both parties are protected and there aren’t (hopefully) issues down the track about where to find the signed contract.

Author: Rachelle Hare