Here’s the thing with commercial contracts—they are unique to the purpose and the parties behind the contract. A contract for the sale of heavy machinery will look very different from a contract for an exchange of services. That’s why businesses retain commercial lawyers to draft, vet, and negotiate commercial agreements.
In this blog, we’ll take a broad look at commercial contracts, including common key clauses and considerations. It is advisable that you contact corporate lawyers if you have any questions.
5 Key Clauses to Include in Commercial Contracts
Contracts are the backbone of modern business. They govern relationships, set out expectations, and ensure parties to the contract receive the value they expect. PwC found businesses that manage contracts poorly lose an average of 9% of revenue every year. Here are some key business law clauses you should have in your contracts:
1. Scope of Work
Clearly define the scope of work or the products and services that must be provided. This will manage expectations for all parties and prevent misunderstandings with regard to timelines, deliverables, and quality.
2. Terms of Payment
Outline the terms of payment clearly in the contract, including when payment is triggered, due dates, the amount, and tax considerations. Factor in late payment penalties, too, to ensure timely payment of contracts. You should also clearly mention the mode of payment to prevent surprises come payment day.
3. Intellectual Property Rights
Intellectual property (IP) is often one of the most valuable assets of a business. Clearly address ownership and use of IP in your contracts. The clause(s) should state who retains ownership of existing IP, ownership of newly created IP, commercialization, confidentiality, and more.
4. Limitation of Liability
Include clauses that limit liability for you and the other contracting party in the event of a breach of contract. Be very clear about the maximum extent of liability and what is excluded from liability. This is essential for minimizing financial exposure and avoiding commercial litigation in St. Catharines.
5. Dispute Resolution and Termination
A dispute resolution clause can save you from expensive commercial litigation in St. Catharines. Ensure your clause outlines arbitration or mediation as the preferred means of resolving disputes. Also, specify the conditions under which either party can terminate the contract. Address details like reasons for termination and notice periods.
3 Essential Considerations for a Successful Commercial Relationship
Commercial relationships are ongoing, and you need to ensure you stay compliant with business laws.
1. Seek Legal Advice From Corporate Lawyers
Regular consultations with experienced lawyers are essential for ensuring your contract is legal and binding under Ontario laws.
2. Performance of Contract
Routinely assess if the terms laid down in the contract are being met. Keep track of renewal dates, milestones, and any penalty clauses if the work isn’t completed on time or to the agreed-upon specifications.
3. Maintain Accurate Records
It’s vitally important to maintain written records of all correspondence pertaining to the contract, amendments, and other related documents.
Maximize Value, Minimize Risks With Commercial Lawyers
Protect your interests, make the most of opportunities, and grow your business responsibly with Lancaster Chown & Welch LLP. Over 140 years, we have helped some of the largest businesses in the Niagara region thrive.
Book a free consultation to discuss your needs with experienced commercial lawyers.