Contracts are signed in minutes but can shape a business relationship for years. These five clauses deserve careful attention before you put pen to paper.
Whether you are engaging a supplier, appointing a distributor or bringing on a new client, a written agreement sets the rules of the relationship. Many commercial disputes could have been avoided if a few key clauses had been read — and negotiated — with care.
1. Scope of work or supply
Be precise about what is being delivered, when and to what standard. Vague descriptions invite disagreement about whether obligations have been met.
2. Payment terms
Confirm the price, currency, payment dates, invoicing requirements and the consequences of late payment. Where prices may change over time, the agreement should say how.
3. Termination
Understand when and how either party can bring the agreement to an end, the notice required, and what happens to outstanding obligations and payments on termination.
4. Liability and indemnities
Limitation of liability and indemnity clauses allocate risk between the parties. A one-sided clause can expose your business to losses far greater than the value of the contract itself.
5. Dispute resolution and governing law
Decide in advance how disputes will be resolved — negotiation, mediation, arbitration or litigation — and which law will govern the agreement. A clear clause can save considerable time and cost if a disagreement arises.
The best time to resolve a dispute is before it begins — in the drafting of the agreement.
If a contract is important enough to sign, it is important enough to review. Our team can help you understand, negotiate and draft agreements that protect your interests.
