Key Provisions In Business Contracts
June 2016 Newsletter Article
Entering into any business agreement is a serious undertaking and requires sufficient time and preparation. Simply understanding the meaning of all of the terms of a typical business contract is an intimidating proposition. Various contractual provisions, some "boilerplate," some not, appear in almost every business agreement. The Metcalf Adair Law firm can assist any Texas entrepreneur understand all of the key provisions of a business agreement. The Metcalf Adair Law firm can also negotiate and formulate an agreement that protects a party's rights and interests, while achieving the inherent goals of the instant transaction.
Here is a synopsis of some key provisions in business contracts:
- Acceleration Clause: This provision provides that upon either party's breach of the contract, the other party may immediately demand the contract's full performance.
- Arbitration Clause: This clause relates to the use of an independent third party to settle disputes without litigation in court.
- Attorney Fees Clause: This contract provision usually dictates that the losing party must reimburse the other party for attorney's fees, and even court fees and costs.
- Choice of Law Clause: Through this provision, parties to a business agreement agree that the terms of the contract will be interpreted by the laws of the chosen state. Parties may also agree to litigate any and all matters in a particular state or jurisdiction.
- Exemption Clauses - This provision seeks to restrict liability of a party. It may do so either in the form of an exclusion clause that attempts to exclude liability completely for specified outcomes, and/or a limitation clause that attempts to limit damages a party pays in the event of some breach of the contract.
- Indemnification Clause: This clause releases from liability, or indemnifies, a party in the event of a loss.
- Liquidated Damages Clause: This provision permits a non-breaching party to recover damages in the event that actual damages are difficult to calculate or ascertain, and must be reasonable under the circumstances.
- Merger Clause: This clause provides that a current written contract abrogates or overrides any previous oral or written agreement. This clause states that the entire agreement between the parties is contained within the words and terms of the contract.
- Non-Waiver Clause: This provision serves a protective function by declaring that a party doesn't waive or relinquish any contract rights by accepting any act or performance by the other party that doesn't comply with the terms of the contract.
- Severability Clause: This contract provision, also termed a "savings" clause, ensures that the remainder of the contract is enforceable if some other portion of the contract is deemed invalid. Otherwise, an entire contract may be invalidated on the basis of one invalid provision. This clause may also allow an invalid provision or section of the contract to be modified to reflect the intentions of the parties.
- Statute of Limitations Clause: This clause sets forth the time frame in which a lawsuit must be filed after a breach of the contract.
- Time of Performance Clause: This contract provision regulates the time frame in which the duties and obligations of the contract must be performed. Parties often include a "time is of the essence" clause within an agreement to set forth that any delay in performance will constitute a material breach of the contract.
Many terms influence the outcome of a business transaction, and, in most situations, all such terms are negotiable. The assistance and guidance of an experienced attorney is crucial to negotiating and understanding any contract before executing it. At the Metcalf Adair Law firm, we can assist you in any such business transaction.