There are potentially an unlimited number of terms in a contract, some are specific to each individual agreement. However some clauses can be found in nearly every agreement and it is worth while getting to grips with these.
- Parties – obvious this clause details the names and addresses of the contracting parties
- Definitions – where defined terms are used in a contract they will (hopefully) be listed under the definitions sections. In some circumstances however there will not be a separate definitions section, instead the first time a defined term is used it will be capitalised and it’s meaning given
- Payment – how much, when and how payments are to be made
- Goods / Services – these need to be adequately described and include details of who is delivering / maintaining them (where appropriate)
- Term – the length of the contract
- Limitation of Liability – either or both parties will be seeking to escape liability in as many circumstances as they can, this should be carefully checked
- Termination – The circumstances under which the parties can terminate the agreement
- Dispute Resolution – This clause may dictate that any disputes are dealt with by arbitration etc instead of going straight to court
- Confidentiality – Certain information disclosed during the contract / business dealings will be confidential and this clause ensures that it is treated as such
- Intellectual Property Rights – Again important to set out who owns what in order to negate the chances of any disagreements or confusion
- Warranties – Where goods or services are provided warranties will be given in relation to these goods or services
- Indemnity – Such clauses create an obligation for a party to make a money payment where certain losses or damage occur
- Force Majeure 0 Protects the parties from ‘Acts of God”
- Jurisdiction / Applicable Law – What courts can hear and dispute and what law is to be applied.
The above list is just a flavour of some of the most important clauses in a commercial contract.
