Contracts are the backbone of business. Without contracts,\nit would be impossible for any company to buy and sell with confidence. But,\nnot all contracts are created equal. \n\n\n\nWhen entering into a commercial contract, you need to make\nsure your team includes these six key clauses to provide you with as much\nprotection as possible should something go wrong. Having the right contractual\nlanguage can often prevent expensive litigation. It can also make the difference\nbetween being on the hook for an expensive breach or being able to terminate\nthe contract amicably. \n\n\n\n1. Jurisdiction\n\n\n\nThanks to the internet, every business has to potential to\nbe a global business. But, this can lead to headaches if you ever need to enforce\nyour contractual rights in court. Where do you bring a lawsuit? What laws\nshould apply to your contract? \n\n\n\nA jurisdiction clause will state where any cause of action\nrelating to the contract will be brought and what laws will be applied. Most\ncompanies choose their local jurisdiction for both the law that should apply to\nthe contract and for the location where lawsuits should be brought. But, your\nlegal team may suggest other options. \n\n\n\n2. Dispute Resolution\n\n\n\nGoing to court is expensive and time-consuming. A lawsuit\nover even a small breach of contract can drag on for years. This keeps your\nbusiness from being able to move forward, and it forces you to sink more money\ninto legal costs.\n\n\n\nA dispute resolution clause can help prevent this. It often\nworks in tandem with the jurisdiction clause to protect your organization from\ngetting dragged into court all over the country. \n\n\n\nIn a dispute resolution clause, the parties agree to use\narbitration or binding mediation instead of filing a lawsuit in court when\nthere is a contract dispute. \n\n\n\nArbitration and binding mediation are much faster and more\ncost effective than traditional litigation. Having a dispute resolution clause\nwill allow your company to move on from any contract dispute quickly and with\nmuch less overhead. \n\n\n\n3. Entire Agreement\nand Severability\n\n\n\nIn commercial contracts, negotiations are often ongoing, and\nthere is usually constant communication between the two parties. This can lead\nto problems if there is a contract dispute. \n\n\n\nIt can become difficult to determine what the actual terms\nof the contract are. Did a later email modify the terms of the agreement? What\nif a regulatory change makes one of the contract terms unlawful, does that invalidate\nthe entire deal?\n\n\n\nEvery commercial contract should have a clause that states\nthat the contract is the entire agreement between the two sides. This clause\nwill also specify how the contract can be modified. This prevents casual\npractice or a single conversation from altering the fundamentals of the deal. \n\n\n\nAnother part of this clause should contain language that\nstates if one part of the contract is found to be invalid for any reason, it\ncan be severed from the contract, and the rest of the contract will remain in\nforce.\n\n\n\nWhile it\u2019s easy to think that an entire agreement and\nseverability clause is just legalese, this clause is vital to protecting your\ninterests in a commercial contract. \n\n\n\n4. Damages\n\n\n\nCourts like certainty, and often contract damages are seen\nas speculative. How can you know what would have happened had the contract been\nhonored?\n\n\n\nOften when two sides are in a contract dispute, the argument\nisn\u2019t over if one side breached or not, the argument is over how to calculate\ndamages. \n\n\n\nInstead of taking your chances with how a judge or\narbitrator will calculate damages, you can state directly in the contract how\ndamages will be calculated. \n\n\n\nDamages clauses serve two critical functions in a commercial contract. They provide certainty in the event of a breach of contract, and they help avoid breaches by making the penalties clear to both sides. \n\n\n\n Never lose a contract again! Work more effectively, increase your revenue, centralize & secure your contracts. Available anywhere, anytime & on any device.Get your Free Demo today! \n\n\n\n5. Termination and\nForce Majeure\n\n\n\nContracts don\u2019t last forever. When does a contract end? When\nthere is an ongoing relationship, it can be difficult to tell when a contract\nhas been fulfilled. \n\n\n\nEven worse, what happens when the underlying assumptions the\ncontract was based on change? A termination and force majeure clause forces the\ntwo sides to make it clear what events can trigger the termination of the\ncontract. This clause also gives the parties an excuse not to perform the\ncontract if something out of their control happens to make performance\nimpractical or impossible. \n\n\n\nThis type of clause can allow a contract to be terminated\nwithout penalty should the cost of materials go above a certain rate or if a\nnatural disaster strikes and makes honoring the contract terms impossible. \n\n\n\nThis clause provides your business with an escape from the\ncontract under certain conditions. \n\n\n\n6. Confidentiality\nand Intellectual Property Ownership\n\n\n\nYour intellectual property is one of your most valuable\nassets. For many firms, it is their entire business. You need to protect your\nintellectual property in your commercial contracts. A confidentiality and intellectual\nproperty ownership clause does two main things:\n\n\n\nIt protects your confidential data, business\npractices, trade secrets, and processes from being disclosed or used by your\ncontracting partner\n\n\n\nIt makes it clear that you retain your ownership\nof your intellectual property, even if you allow the other party to use it\n\n\n\nIntellectual property disputes are the fastest growing cause\nof business litigation. You need to protect your assets in your commercial\ncontracts.