Important clauses in a contract – some may not be obvious

For completely understandable reasons, clients tend to focus on certain clauses in their contracts as being most important. The obvious clauses of this type, where you are selling goods or services are describing the goods or the service sufficiently accurately and of course the price to be paid. After that, the focus tends to be

Home » commercial law » Important clauses in a contract – some may not be obvious

For completely understandable reasons, clients tend to focus on certain clauses in their contracts as being most important. The obvious clauses of this type, where you are selling goods or services are describing the goods or the service sufficiently accurately and of course the price to be paid. After that, the focus tends to be on timing.

Clients in my experience will then typically look at ways to protect themselves and will often want to include disclaimers, exclusions or limitations on liability. When it comes to these aspects, care needs to be taken, and this is a primary reason to get good legal advice. If you include every exclusion or limitation under the sun, not only will you possibly put off the prospective buyer, but if you are dealing with consumers, such clauses may well be unlawful.

2 important contract clauses you may not be aware of

From the lawyers perspective, there are 3 particularly important clauses which clients don’t generally know about and which should be included in a contract for goods or services. The clauses are :-

Entire Agreement clause

Including such a clause in your contract will protect you against claims that you made representations before the contract which were erroneously or deliberately ommitted. This is the sort of defence which is commonly raised, either because the defendant genuinely believes it to be the case, or as a tactic, if they breach the contract. It is important to recognise that whilst an entire agreement clause offers protection about the pre-contract dealings between the parties, it doesn’t protect against any variations, express or implied, to the contract which take place after the contract is entered into.

You therefore still nee to be careful not to agree to alter the contract, which can happen by verbal or written communication or by conduct. This, again, is a commonly raised defence if there is a dispute which you as claimant, believe is straightforward i. e if the defendant simply doesn’t pay, they may argue that the reason they aren’t paying is due to some kind of agreement to vary the terms.

Time is of the essence

Most contracts will, of necessity, include terms about timing, whether in relation to when goods will be delivered or services supplied. Some contracts are very specific about timing, but this in itself may not be enough if the timing is not complied with.

If there is a delay and you don’t include a contract clause that time is of the essence, it is likely that you will have to allow the party in breach a reasonable time period to remedy the breach. You may already have lost confidence in them or strongly suspect they won’t be able to deliver on their promise but you will probably need to wait, suffering inconvenience and possible ongoing loss.

By making time of the essence, you are in effect, elevating the issue of time compliance to a fundamental term of the contract. Breach of a fundamental term of a contract generally means you can act faster and potentially treat the contract as ended, do what you need to do to minimise your inconvenience and loss, and then still potentially pursue the other party. Consequently, this clause is extremely important and should be carefully considered.

If you need advice on any type of contract for your business, get in touch with me or one of our other commercial solicitors, we would be delighted to help.

commercial law • Debbie Serota

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