Most business contracts contain standard, or “boilerplate,” provisions. While these clauses are often buried at the end of the agreement, it is important to read them carefully, as they may become extremely important in a contract dispute.
Below are a few examples of boilerplate provisions and why they matter:
Force Majeure: The contract term, which means “superior force” in French, relieves the parties from performing their duties if certain unforeseeable circumstances occur that are beyond the parties’ control, such as natural disasters and other “acts of God,” terrorism, labor strikes, and supply shortages. Problems can arise when the clauses are drafted too narrowly, and the other party disputes whether the particular event excuses performance. To prevent this from occurring, force majeure clauses should include an all-encompassing phrase that covers “other unforeseeable events beyond the control of the parties.”
Governing Law: This provision dictates what law will apply to the resolution of disputes. If the other party is located in another state or country, you should insist that your home state’s law controls. Otherwise, you could be stuck litigating a contract dispute under unfamiliar and even unfriendly laws.
Forum Selection: This clause specifies where the parties can bring lawsuits under the contract. It is advisable to negotiate for the most convenient and favorable location, such as the state or federal courts in your state. Having to travel to another state or country to prosecute or defend a lawsuit can be both logistically complicated and costly.
Arbitration: Many contracts expressly state that all disputes arising out of the agreement must be subjected to final and binding arbitration. While arbitration is often an effective way to resolve disputes without litigation, it is important to consider whether you want to relinquish your right to a court trial. If not, the arbitration clause can be tailored so that only certain issues must be resolved through alternative dispute resolution.
How We Can Help
Before signing an important business contract, it is imperative to consult with an experienced business attorney. Our firm can explain what each provision means and negotiate the most favorable terms for your company. CONTACT US TODAY AT (832) 510-2900 TO SCHEDULE A FREE CONSULTATION.