3 kinds of clauses that strengthen business contracts

On Behalf of | Nov 15, 2022 | Business Law |

Contracts are the lifeblood of business. They help bring work to your company and guarantee the delivery of materials or services that you require to operate. The details of each contract will be unique based on the needs the contract helps your company fill and the relationship your business has with the other party.

Although you want a custom contract created for each specific agreement, there are certain clauses that can be important inclusions in many different types of contracts. What can you include in your business contracts to better protect your business and the stability of its operations?

A confidentiality clause

Whether you are bringing in a construction company to work in your corporate offices, hiring a new engineer or educating a new client about your company’s patented processes, you want to make sure that information not readily available to the public remains private. Confidentiality clauses help protect everyone involved in the contract.

A penalty clause

Different kinds of contracts required different kinds of potential penalties as an incentive to do the right thing. A contract signed with a client or customer may include a financial penalty for late or missed payments. There could also be penalties imposed on suppliers for service providers for contract beaches or delivery delays.

Adding specific consequences for contract breaches can reduce the likelihood of the other party defaulting or otherwise failing to fulfill their obligations and will protect you from the financial consequences if they do.

A conflict resolution clause

Do you want to require that the other party agreed to a sit-down meeting, a mediation session or arbitration before filing a lawsuit? Requiring private dispute resolution is a common tactic employed by all sorts of businesses. It is often possible to settle claims, even those founded in real failings, outside of court if everyone has the right motivation.

There are many other kinds of clauses that can be useful in different contracts, from substitution agreements signed by those hiring a construction firm to non-solicitation agreements that apply to a new member of your sales team.

Discussing your company’s contractual needs with a lawyer can help you create the most effective documents for your organization.


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