One-Sided Contract Clauses

Most contracts never get reviewed by a lawyer before they are signed. Here are few contract clauses that catch my eye – and they should catch your eye, as well.

The foreign venue and jurisdiction clause. Many contracts have a clause that states if there is litigation, it must be in someplace far away from here. This greatly increases the cost of litigation.

The attorney’s fees clause. A book can be written on attorney’s fees clauses.  Most business people are familiar with a prevailing party clause. However, deciding who prevailed can be difficult because most litigants do not get everything requested.  My favorite is the attorneys fees clause awarding fees to just one party.  Some contracts will define what it means to prevail or require that a party substantially prevail.  Be sure you know exactly what it means based upon the applicable law.

The termination clause. This clause should always catch a person’s attention. The financial risk of a contract depends heavily on the length and subject matter of the contract. Some contracts allow one or both parties to terminate the contract on short notice. Other contracts are for many years. Whether a short or long contract term favors one party or the other is very dependent on the facts of each contract and the industry. Note the proposed contract term, discuss it with legal counsel, decide whether there is significant risk, and then decide.

The insurance clause. Most commercial contracts have an insurance requirement. Failure to carry the agreed upon insurance is a breach of the contract. Most of these breaches go unnoticed until there is an incident resulting in an insurance claim.