Frequently Used Contract Provisions
January 21, 2020 by Kristie A. Scott in Business Law
Wondering what those random contract clauses mean? Short explanations are provided here.
- Whereas Language
- These terms provide information regarding why the parties are entering into an agreement.
- Essential Terms
- This is the agreement itself. It explains what the parties are bargaining for and the consideration provided in exchange for the bargain.
- Default Provision
- This explains what will happen if either of the parties fail to perform their obligations under the agreement
- Liquidated Damages
- Some contracts outline the damages which will become due in the event one party breaches the contract.
- Time is of the Essence
- This clause is included to motivate the parties to act quickly to perform the terms of the contract.
- Entire Agreement
- Often in contracts, you will find a provision which provides that this is the “entire agreement” between the parties. The purpose of this provision is to confirm, despite prior negotiations or agreements, the current agreement is the final agreement between the parties.
- Choice of Law and Venue Selection Provisions
- Often contracts will include language which chooses the state or federal law which applies to the contract and identifies the courts or jurisdiction where lawsuits regarding the contract must be filed. These provisions are especially important when the parties are located in different counties, cities, or states.
- Arbitration Clause
- Some contracts require disputes to be resolved outside of the courts through an alternative dispute resolution method known as arbitration. This may mean protections provided by the court are excluded. It may also increase the initial filing cost to have the dispute resolved.
- Attorney Fees Provisions
- Contracts may have an attorneys’ fee provision which may provide the prevailing party to a dispute, tried in court, to be reimbursed their attorneys’ fees by the losing party. These types of provisions are especially important in the State of Florida, where the only ways to obtain an award of attorneys’ fees is based upon Florida Statutes or contract provisions.
- If the parties to the contract desire to keep the contract terms between them, a confidentiality clause instructs them to avoid sharing the contract terms with others.
- This provides the contact information for each party and provides how they should be contacted regarding the contract.
- The contract may require one party, or each party to protect the other from lawsuits or disputes brought by third parties.
- Severability Clause
- If any provision in the contract is found to be invalid, the rest of the contract will remain valid and enforceable.