Most commercial contracts get the commercial terms right: what is being sold, for how much and by when. The disputes tend to arise from the clauses nobody paid attention to when everyone was getting along. These are five worth checking in every agreement.
1. Breach and cancellation
Spell out what counts as a material breach, how much time the defaulting party gets to remedy it, and what the innocent party may do if they fail to. Without a clear process, parties argue about whether cancellation was lawful, and the one who cancels too early can find themselves in breach.
2. Dispute resolution
Decide in advance how disputes will be resolved: negotiation, mediation, arbitration or court. Choose the governing law and the forum, and say who bears the costs. A well-drafted clause can save months and a considerable amount of money.
3. Limitation of liability and indemnities
Without a limit, exposure can be out of all proportion to the value of the deal. Agree what is capped, what is excluded altogether (such as indirect or consequential loss), and who indemnifies whom, and for what. Make sure the wording is clear, as courts interpret exclusions strictly.
4. Entire agreement and non-variation
An entire-agreement clause confirms that the written contract is the whole deal, while a non-variation clause (often called a Shifren clause) requires any change to be in writing and signed. Together they guard against claims based on informal side-promises and later “understandings”.
5. Domicilium and notices
Each party should nominate an address for formal notices and legal service, and the contract should say when a notice is deemed received. When a notice is disputed, a clear domicilium clause is often what the outcome turns on.
A final point
Templates are a useful starting point, but they are not a substitute for tailoring. The same clause can work very differently depending on the industry, the parties’ bargaining power and the risks involved. It pays to have an attorney review the agreement before signing, not after the dispute has begun.
This article is general information only and does not constitute legal advice. The law may have changed since publication, and reading this article does not create an attorney-client relationship. Please consult an attorney about your specific circumstances.
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