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Before you sign a contract

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A list of points to consider carefully before a voluntary organisation signs a contract

Checklist

Use this checklist to make sure you have considered all the implications of entering into a contract. 
This information is from Sustainable Funding – a guide for trustees which can provide more detailed advice. Please also see the Knowhow page Is contracting right for us?

  • Legal and professional advice has been sought, if appropriate, and duly considered. See the Legal and Professional Advice section below which includes links to Knowhow pages.
  • The organisation is legally empowered in its governing document to enter into the contract.
  • The contract maintains the independence and purpose of the organisation.
  • The implications of the contract for trading have been considered (for example, in relation to the need for a trading subsidiary). 
  • The risks placed on the organisation by the contract have been assessed and are reasonable.
  • The contract is commercially fair to the organisation.
  • The organisation is aware of the costs involved in delivering the contract. 
  • The terms of the contract are fully understood by, directors, trustees and senior staff.
  • Any contract terms relating to underperformance or failure to deliver are fully understood.
  • VAT implications have been considered. 
  • The organisation has the skills and resources to carry out the contract.
  • The implications for governance have been considered (for example any relationship between a contractor and your trustees, director or senior staff members).
  • The risks to the organisation and trustees, directors and senior members of staff have been considered (for example in relation to unincorporated organisations).

Sustainable Funding – a guide for trustees is available free to NCVO members and is £20 for non members.

Legal and professional advice

LawWorks is a broker for advice from pro bono lawyers to small voluntary organisations. It runs a free legal clinic in association with Community Matters and Dechert LLP. Solicitors and law firms run pro bono programmes and it may also be worth asking them directly.

NCVO produces a Quick Guide to Seeking Legal Support, free to members and £5.82 for non members, which suggests how to find free and low-cost sources of legal advice.

You can find general legal information from our Knowhow site: 
• Legal forms for organisations 
• Introduction to legal forms 

For specific advice you can contact a lawyer. Some of the bigger and well known firms include Bates Wells Braithwaite (BWB)Russell CookeFarrer & Co or Hempsons. Other national or local, smaller, and possibly cheaper, firms can be found in the Law Society’s Find a Solicitor directory that can be filtered by location.

This Charity Commission page provides useful tips for charities on using a trading company to reduce risks and provides general information on delivering public services.

Page last edited Feb 01, 2017

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