If you are a business owner or manager, you know how important contracts are. Their terms dictate the rules that parties must follow when doing business with one another. Entering into a bad contract can do much damage to a business, which makes it essential for businesses to ensure they understand key clauses in business contracts and their repercussions.
Are you a business owner or manager in the Houston area in need of quality contract work and guidance? Look no further than Weisblatt Law Firm, where we help Houston businesses thrive and handle the many business issues that arise in commerce. Call (713) 666-1981 for a free phone consultation today.
Key Clauses in Business Contracts
Every business contract must contain certain clauses, regardless of the type of business or the circumstances. These essential clauses are fundamental to business dealings and provide essential protections for both parties. As such, having an attorney handle your contract affairs is strongly recommended to protect your business’s future.
Confidentiality
Confidentiality protects all parties to contracts by safeguarding sensitive business information about parties, their plans, and operations. Without a properly drafted confidentiality clause in a contract, your business could face serious setbacks.
Consider a partnership between Business A and Business B to launch a product in Houston. If information gets out about the partnership before the launch, business B’s competitors may gain an edge. By restricting Business A from releasing early information about the partnership, Business B remains protected.
Termination Conditions
Not all business ventures run smoothly. In fact, some see situations arise where the best decision is contract termination. In circumstances like these, the optimal action tends to be complete contract termination with no penalty for breach.
However, these termination conditions must be well-thought-out and meticulously drafted into contracts. Parties must be aware of their repercussions or find themselves surprised by unexpected consequences. An experienced business attorney will be of great help if you need termination clauses in your contract.
Jurisdiction
Multi-state business plans are common and are becoming more so. As such, parties to contracts involving different jurisdictions must decide on jurisdiction matters in the event a dispute arises. Jurisdiction clauses in contracts allow parties to determine where their disputes will be resolved.
Depending on the nature of the business and the circumstances, certain jurisdictions may be more or less favorable to one or both parties. An experienced business law attorney will understand the ramifications of jurisdiction decisions and work to ensure their client is protected.
Dispute Resolution
Disputes are common in business, which is why planning for disputes is part of most — if not all — business contract negotiations. Business contracts should contain terms that dictate how the parties are to handle disputes. These terms provide a sense of stability to contracts and give the parties predetermined instructions when problems arise. The parties save time and money with predetermined avenues of handling issues.
Common dispute resolution avenues found in contracts include:
- Arbitration
- Mediation
- Litigation.
Arbitration settles disputes with far less formality than a trial. Parties choose experienced arbitrators to steer the conflict to resolution. The arbitrator makes the ultimate ruling after hearing evidence from both sides. This decision is binding but may be appealed.
Mediation, on the other hand, is not binding. It involves a third-party mediator who works to bring the parties together on an agreement that benefits both as much as feasible under the circumstances. Because it is non-binding, many cases proceed to arbitration or trial after attempting mediation.
When parties turn to litigation, the court gets involved. A judge and possibly a jury become the decision-makers. Businesses try to avoid this route due to how much time and money it costs to litigate.
Well-planned dispute resolution clauses in contracts are vital to avoiding long, drawn-out battles that consume resources and breed uncertainty.
Damages
Damages follow a breach of contract. If your business experiences a breach, you may seek damages from the party that breached the contract. One way of streamlining this process is to add damages clauses to contracts. These clauses dictate the form and manner in which a party in breach must pay for the losses they have caused.
In general, damages in contract cases are meant to compensate, not unjustly reward, the party who has suffered the breach. As such, the damages requested, such as liquidated damages, must reflect actual damages.
Payment Terms Clauses
Businesses can protect themselves with detailed payment terms clauses that cover all eventualities. Properly drafted clauses of this nature should, at a minimum, include:
- Exact costs and expenses
- Precise allocation of costs and expenses
- How payments will be processed
- Acceptable forms of payment
- Terms for dealing with late or missed payments
- Terms for dealing with canceled payments.
When negotiating contract terms, it is essential to cover the above-detailed matters and others with precision. There should be no doubt as to each party’s responsibilities when it comes to payments.
Weisblatt Law Firm provides solution-driven representation and counsel to Houston-area businesses.
Breach of Contract
Breach of contract occurs when a party fails to uphold their duties under the contract without reasonable justification. In all contracts, parties must act in good faith throughout the life cycle of the agreements. Unfortunately, this does not always occur. Breach of contract is a common issue in business that can cripple business operations overnight.
Contract language should cover breach of contract in depth. Terms should discuss what is to be done in the event of a breach. They should also define many instances of what a breach is under the contract. Seasoned contract attorneys are essential in these situations.
Guidance From an Experienced Houston Lawyer
Properly planned, negotiated, and drafted contracts can protect your business and help it thrive. Tailored guidance from an experienced business attorney will help you make the most appropriate decisions for your business. Don’t hesitate to seek the guidance you deserve.
For a free phone consultation with one of Houston’s most trusted business attorneys, contact Weisblatt Law Firm. Get the counsel and guidance you deserve. Call (713) 666-1981 today.
Attorney Andrew Weisblatt
Mr. Weisblatt has practiced continuously since becoming licensed in 1992 and has represented businesses ranging in size from one person start-up ventures to multi-national corporations employing hundreds of people in multiple countries. From 2005 through 2009 Mr. Weisblatt was in-house counsel and chief operating officer of a multi-national corporation in the steel products industry. That in-house position provided valuable insight into how businesses work and what they actually need from their lawyers – both in-house and outside counsel. Attorney Bio
