Reading The Fine Print: 6 Things To Be Wary Of

Contracts are one of the most important documents you’ll ever sign in your life. A contract is a legally binding agreement between two or more parties, and it can be used for anything from hiring a new employee to taking out a loan.

But before you sign any contract, it’s important to read the fine print. By reading the fine print or having someone explain it to you, you can ensure that you’re getting what you expect from the contract and that there are no surprises down the road.

Reading The Fine Print

Hidden fees and penalties

Often, companies will try to sneak in hidden fees and penalties by burying them in the fine print. Be on the lookout for processing fees, administrative fees, or late payment penalties.

For instance, in homeowners insurance policies, there’s often a clause that allows the insurance company to cancel your policy if you miss a payment. And while that may not seem like a big deal, according to Avner Gat, if your home is damaged and you need to make a claim, you could be left without coverage – and stuck with a hefty repair bill. Also, check the interest rates on any loans you take out.

If you’re unsure what a fee is, ask the company to explain it before you sign the contract. Suppose they try to avoid or skirt your question.

Changing the terms

Be aware of any clauses that state that the company can change the contract terms at any time. This means they could raise your rates or add new fees without your knowledge or consent. If you see this in a contract, try to negotiate with the company to have that clause removed. It may be best to walk away from the deal if they’re unwilling.

Additionally, watch out for automatic renewals. These clauses often fly under the radar, but they can be very costly if you’re not careful. Make sure you understand how an automatic renewal works before signing any contract. Otherwise, you could inadvertently end up agreeing to terms you’re not happy with – or paying for a service you no longer want or need.

One-sided terms

Another thing to watch out for in the fine print is one-sided terms. This is when the contract is heavily biased in favour of one party, usually the company or organization that wrote it. One-sided terms can be found in everything from employment contracts to loan agreements.

For example, an employment contract may state that the company can terminate your employment at any time, for any reason, and without notice. Or, a loan agreement may state that the lender can change the interest rate at any time and without prior notice. One-sided terms are often unfair to the other party, so it’s important to look for them.


A loophole is a way for one party to get out of the contract without repercussions. For example, a company may try to include a clause that says they’re not responsible for any damages caused by their product – even if it’s defective. Or, a loan agreement may state that the lender can call the loan due at any time, even if you’re current on your payments.

Loopholes like these can be extremely unfair, so it’s important to read the fine print carefully and look for any clauses that could allow the other party to back out of the contract. 

Arbitration clauses

Arbitration clauses are becoming more and more common in contracts these days. This clause says that if you dispute with the other party, you must go through arbitration instead of taking them to court.

While arbitration can be a faster and cheaper way to resolve a dispute, it’s not always in your best interest. First, you’ll likely have to pay the arbitrator’s fees, which can add up quickly. Secondly, the arbitrator may not be impartial – they could be friends with the other party or have a financial interest in the case’s outcome. And finally, the arbitrator’s decision is usually final, which means you won’t be able to appeal if you don’t like the outcome.

Third parties

A third-party clause allows the other party to bring in a third party to help them with the contract – and you may not even know about it until it’s too late.

For example, let’s say you’re signing a lease for an apartment. The lease may include a clause that says the landlord can bring in a third party to help them with repairs or maintenance. This means they could have someone enter your apartment without your knowledge or consent.

Reading The Fine Print

By being aware of these six things to watch out for, you can protect yourself from unfair terms and hidden fees. It’s important to take your time reading through a contract and ask questions if something isn’t clear.

If you’re still unsure what a clause means, get help from an attorney or someone familiar with contracts.

Reading The Fine Print: 6 Things To Be Wary Of 1

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