A business contract lawyer shares the six things every agreement must contain.
If your company is thinking of signing a new work agreement, it’s a good idea to have it reviewed by a business contract lawyer. While you may be focused on wrapping up the deal quickly to ensure speed to market, there are a few specific areas many companies tend to overlook – much to their determinant later on.
According to business contract lawyers, here are six issues every contract should cover:
- Contract Issues Regarding Ownership of Property
If you are being hired to create something, be it website, product prototype, or imagery, it’s imperative to understand who owns it upon completion. Whether you own it entirely and lease it back, or your partner has some level of shared ownership; this must be laid out clearly in the contract. Alternately, the client may end up owning it entirely. In this case, you’ll want to make a condition of ownership payment in full on all dollars outstanding.
- Does Your Contract Cover Indemnification and Liability?
This section is of particular importance as it determines who is held responsible in certain circumstances (think intellectual property violations, safety failures, etc.). You’ll want to ensure you are indemnified or protected and held harmless in the event your client uses the property in ways other than it was intended. Alternatively, you’d want to make sure you’re compensated handsomely in the event you bear any portion of this risk yourself.
- Contracts Dictate Choice of Law and Court Venue
This section of a contract determines where legal proceedings take place, in turn, dictatating the laws governing any contract disputes. For example, property laws in Maryland are quite different than property laws in California. If you and your lawyer are unfamiliar with the laws governing the contract, it could leave you vulnerable in the future.
- Your Contract Should Cover Unavoidable Circumstances
Also known as “Force Majeure,” this outlines what happens in the event one or both parties are unable to fulfill their obligations due to things beyond their control. For example, a hurricane swept away the manufacturing plant, or lightning struck your principal architect. A force majeure clause ensures you aren’t held liable for not meeting the contract in the event something unforeseen and catastrophic occurs.
- Does Your Contract Spell Out How Expenses and Billing Are Covered?
Bluntly: how are you getting paid? Include details on both method and timing of payment, as well as invoicing and reimbursement for any expenses incurred on the client’s behalf. It outlines responsibility and usually includes penalties and other outcomes when one or both parties do not meet terms.
- Termination Clauses: An Important Part of Your Business Contract
This section outlines the reasons either you or the client can terminate the agreement, the terms they must meet to do so, and any compensation requirements arising from termination. These clauses should protect both parties and ensure there is clarity on terms in all instances.