Daniel W. Uhlfelder P.A. | Attorneys At Law


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3 clauses worth including in business contracts

On Behalf of | Sep 8, 2023 | Small Business

Businesses may sign contracts so that they can secure commercial space in which to operate. They might sign a contract with a vendor who will deliver key supplies. Employee contracts are also important, as they both clarify what the company expects from a worker and what that worker must do to secure their wages and benefits.

Unfortunately, simply signing a contract does not ensure that the other party will fulfill their end of the agreement. Frequently, businesses find themselves embroiled in contract disputes when another party defaults on contractual obligations and causes some kind of financial hardship for the organization.

Businesses can include certain clauses in their contracts that can eliminate challenges related to their agreements in the future or that can at least make resolving those conflicts a bit easier. The following kinds of clauses can often be added to contracts for better protection.

Conflict resolution clauses

There was a time not long ago when many businesses used mandatory arbitration clauses in everything from employment contracts to agreements with individual consumers. Many companies have begun to pivot away from mandatory arbitration in favor of mediation. Business mediation services can help organizations navigate disputes related to their contracts without needing to go to court.

Non-disclosure clauses

The terms that a business includes in a contract can give the organization an edge over competitors. The information that they provide to workers or customers can also sometimes constitute trade secrets. Non-disclosure agreements integrated into contracts can help organizations protect information that is not available to the public from distribution or publication by unhappy customers or disgruntled former employees.

Penalty clauses

Many contracts will include due dates for payments or delivery dates for goods and services. A penalty clause can provide the basis for seeking damages when another business or a consumer fails to follow through on their contractual obligations. Appropriate penalty clauses create obvious damages that can contribute to the total value of a lawsuit brought against someone who breaches a contract and can deter some parties from violating the contract.

There are numerous other clauses, from force majeure clauses in leases to restrictive covenants in employment contracts, which can help a business more effectively protect its interests when entering into an arrangement with another party. Considering a company’s needs and the purpose of any particular contract can help organizations decide which unique terms they need to add to their written agreements.