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Publication date: 08.05.2024
Lawyer, graduated from the National University "Odesa Law Academy" with honors. Since 2017, I have been specializing in legal and educational and general legal issues. I am the author of legal articles, scientific publications and articles in the educational environment. Mentor of the "Veritas" legal clinic. The owner of the legal blog "Educational_law_ua" on Instagram.
When concluding a supply contract, it is important to check the counterparty in order to minimize risks and ensure the successful fulfillment of contractual obligations. Checking the counterparty is an important stage in the process of concluding a contract, which allows you to assess the reliability, stability and compliance of the counterparty to your company. In this article, we will consider the main aspects of checking the counterparty, as well as pay attention to legal norms and tools that can be used for legal analysis of documents and contracts.
1. The importance of checking the counterparty
Verification of the counterparty before concluding the supply contract is a key step to ensure the security and effectiveness of the agreement. This process helps:
Assess the financial stability of the counterparty and its ability to fulfill its obligations under the contract.
Make sure of the legality of the counterparty's activities and compliance of its business processes with current legislation.
Identify possible risks associated with interaction with the counterparty, including legal, financial, and reputational risks.
2. Analysis of documents
Legal analysis of documents is an important stage of checking the counterparty. When concluding a supply contract, it is necessary to carefully study the following documents:
Statutory documents of the counterparty: it should be checked whether the counterparty is a legal entity, whether it has all the necessary permits and licenses to carry out its activities.
Financial documents: it is important to analyze the counterparty's financial statements to assess its financial stability and ability to meet its obligations.Other documents: these can be permit documents, quality certificates, contracts with other counterparties, court decisions concerning the counterparty, and other documents characterizing the counterparty's activities.
3. Legal analysis of documents
Analysis of documents by a lawyer is an integral part of the counterparty verification process. Lawyers conduct a detailed analysis of documents related to the counterparty with the aim of:
Detection of possible violations of legislation or unreliability of information provided by the counterparty.
Conviction that the counterparty acts within the law and has no restrictions or prohibitions regarding the conclusion of the supply contract.
Checks for any litigation or arbitration proceedings in which the counterparty may be involved.
4. Analysis of contracts
Analysis of documents by a lawyer is a key stage in checking the counterparty when concluding a supply contract. Lawyers should carefully check the draft contract for the presence of risks that may arise during the execution of the contract. Here are some important aspects to check:
Legal compliance: the draft contract must comply with current legislation and regulations.
Clarity and unambiguity of provisions: the terms of the contract must be clearly formulated, without ambiguities or contradictions.
Protecting Your Company's Interests: The contract should include terms that protect your company's interests, such as liability provisions, dispute resolution provisions, etc.Definition of the rights and obligations of the parties: the contract must contain clear provisions on the rights and obligations of the parties, including delivery terms, payment terms, delivery volumes and other important aspects.
5. Tools for checking the counterparty
There are various tools and methods that can be used to verify the counterparty:
Analysis of open sources: you can use the Internet, public registers, mass media to obtain information about the counterparty.
Ordering audit services: auditors can audit the counterparty's financial statements and provide an independent opinion.
Information from other counterparties: Finding out the reviews of other counterparties can help determine the reliability of the counterparty.
Conclusions
Verification of the counterparty before concluding a supply contract is an important stage that helps to minimize risks and ensure successful fulfillment of obligations. Legal analysis of documents and contracts by a lawyer are key steps in this process. It is important to comply with legal regulations and use various tools to obtain reliable information about the counterparty, which will allow your company to avoid undesirable situations and protect its interests.
