It goes without saying, but contracts run the world. Whether you are signing up for a new cell phone plan or are accepting a new job offer. You will likely be reviewing and signing a contract. Contracts can seem boring or mundane on the surface. Yet even if you aren’t an attorney. There are several important clauses that you should watch for in your contracts. Noting these specific clauses, you can understand your obligations or even try to renegotiate them if you’d like. The choice is yours.
Notable Clauses in Your Contract
To start, let’s talk about dispute resolution clauses. These clauses are important because they establish the ways that you can sue under the contract. If you feel like the counterparty has not fulfilled its end of the contract. You will need to follow the procedures as outlined under these types of clauses. For instance, a dispute resolution clause will tell you where you can initiate a lawsuit and if you are required to have a judge or jury trial.
Importantly, a dispute resolution trial may say that you are compelled to bring any claim through arbitration. Arbitration is an alternative dispute resolution mechanism. An arbitrator, rather than a judge, adjudicate the dispute. He or she can also issue an arbitration award, which is binding on both parties. Some consumer advocates claim that mandatory arbitration clauses are discriminatory or unfair. Whether you agree with that argument or not, it is important to see whether it exists in your contract.
Next,
Keep an eye on confidentiality clauses. These types of clauses are more commonly seen in employment agreements. However, you may find them in other places. Basically, these clauses compel you to keep certain information private. This may include things like trade secrets, formulas, copyrights, scientific information, or other proprietary information. Essentially, by assenting to these clauses, you promise that you won’t share the covered information with others. If you do, you could be sued by the other party. Which can lead to fines or other types of punishment.
From confidentiality clauses, look out for indemnification clauses. The word indemnify means to compensate someone else for some harm or loss that they suffered. Naturally then, an indemnification clause is a contractual provision stating that you will indemnify another party in the contract. In some other circumstances, you may sign a contract where the other party will agree to indemnify you. And in others, there may be mutual indemnification, where you and the counterparty will indemnify each other.
Ultimately, indemnification clauses are important to note because they can force you to pay certain fees if certain events were to occur. For instance, if your behavior causes a third-party to sue the counterparty for your contract. You may be forced to pay the counterparty’s legal fees. Carefully read indemnification clauses, as they may bind you to certain financial obligations that you don’t initially expect.
Finally,
Make sure to monitor merger clauses. They can also be called integration clauses. Essentially, merger clauses state that the underlying contract is a complete and full agreement between the parties.
While you may think that all contracts are complete agreements between both parties, this may not necessarily be the case. Some may believe that earlier agreements between the parties may apply to the current contract. By using a merger clause, however, that argument is moot. In layman’s terms, it basically means that the four corners of the contract encompass the whole agreement. Granted, the four corners of the contract may refer to other documents. The bottom line, however, is that the contract is the final and complete agreement between the parties.
You will typically find merger clauses near the end of the contract. These clauses are found in many different contracts. Including employment contracts, lease agreements, asset purchase agreements, and more.
Reading the Fine Print
The great news is that you don’t need to be a lawyer to monitor and read these important contractual provisions. Whenever you are about to sign a new contract, take a few seconds to review the fine print. See if these provisions are included and the responsibilities that are assigned to you. If they are overly burdensome, you may want to try renegotiating that provision.
If you need help with any of this, we encourage you to contact us. Our team of experienced and driven lawyers can review your contracts and provide you with some valuable peace of mind. We would be happy to work with you.