Review period: Overview, definition, and example
What is a review period?
A review period is a specific timeframe during which a party can examine, evaluate, or respond to a document, decision, or agreement before it becomes final. Review periods are commonly used in contracts, employment agreements, regulatory compliance, and financial transactions to allow time for due diligence and informed decision-making.
For example, an employee may have a 14-day review period to consider a job offer before signing the contract. Similarly, a business may have a 30-day review period to inspect delivered goods before accepting them.
Why is a review period important?
A review period ensures that businesses and individuals have enough time to assess important documents, transactions, or obligations before making binding commitments. It helps prevent rushed decisions, reduces misunderstandings, and allows for corrections or negotiations if needed.
For SMBs, review periods are essential when finalizing contracts, approving financial statements, or evaluating service agreements. Having a structured review period helps businesses maintain compliance, avoid errors, and make informed choices.
Understanding a review period through an example
Imagine a small business negotiating a contract with a new vendor. The agreement includes a 10-day review period, allowing the business owner to examine the contract terms, consult legal counsel, and request any necessary changes before signing. This prevents the owner from committing to unfavorable terms.
In another case, a company purchases equipment from a supplier with a 15-day review period to inspect the products for defects. If the company finds issues within the review period, it can request replacements or repairs without additional costs.
An example of a review period clause
Here’s how a review period clause might appear in a contract:
“Each Party shall have a review period of [X] days upon receipt of this Agreement to examine its terms and conditions. If no objections or modifications are requested within the review period, the Agreement shall be considered accepted as written.”
Conclusion
A review period provides businesses with the necessary time to evaluate agreements, transactions, and obligations before making final commitments. For SMBs, implementing review periods in contracts and business dealings ensures careful decision-making, reduces risks, and allows for adjustments before agreements take effect. Clearly defining review periods helps businesses operate smoothly and avoid legal or financial complications.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.