A
Acceleration Clause
The Acceleration Clause in contracts allows the lender to demand immediate repayment of the entire loan amount if the borrower violates specific terms, such as defaulting on payments. It accelerates the repayment schedule, addressing breaches and protecting the lender's interests.
Acceleration of Rent Clause
The Acceleration of Rent Clause in lease agreements allows landlords to demand immediate payment of future rent installments if the tenant breaches lease terms, expediting the rent payment schedule. It addresses default situations and safeguards the landlord's interests.
Access Clause
The Access Clause in contracts grants one party the right to access or use certain property or resources owned by another. It outlines the terms and conditions governing such access, ensuring clarity and preventing disputes over usage rights.
Access Easement Clause
An Access Easement Clause in contracts grants a party the right to use a defined portion of another's property for specified purposes, such as ingress or egress. It establishes the terms governing the access easement, ensuring legal clarity and preventing disputes over property access.
Accord and Satisfaction Clause
An Accord and Satisfaction Clause in contracts enables parties to settle disputes by agreeing to alternative performance or compensation. It creates legal certainty by defining the terms under which the original obligations are discharged, providing a framework for resolving disagreements without formal legal proceedings.
Accrued Rights Clause
An Accrued Rights Clause in contracts preserves the rights and obligations of parties that have already arisen before the contract's termination or expiration. It ensures that rights accrued under the agreement remain enforceable, offering legal clarity and protection even after the contract concludes.
At Will Employment Clause
An "at-will employment" clause in a contract signifies that the employer or employee can terminate the employment relationship at any time, with or without cause and without prior notice. This clause provides flexibility to both parties and is a common feature in employment contracts in many jurisdictions.
Audit Clause
An "audit clause" in a contract grants one party the right to examine and verify the other party's financial records, ensuring compliance with contractual terms. This provision promotes transparency, accuracy, and trust by allowing for independent audits to confirm adherence to agreed-upon financial and operational obligations.
Amendment of Bylaws Clause
The Amendment of Bylaws Clause in commercial contracts empowers parties to modify or update the bylaws governing their contractual relationship. Bylaws typically outline the internal rules and procedures for an organization, and this clause allows for their adaptation to changing circumstances without requiring an entirely new contract.
Amended and Restated Agreements Clause
The Amended and Restated Agreements Clause in commercial contracts provides a mechanism for parties to modify and restate the terms of an existing agreement. It allows for flexibility in adapting to changing circumstances without requiring the creation of an entirely new contract.
Agreement Not to Sue Clause
An Agreement Not to Sue Clause in commercial contracts is a provision that bars one or both parties from pursuing legal action against each other in the event of a dispute. This clause serves to pre-emptively resolve conflicts through alternative means, such as arbitration or mediation, rather than resorting to litigation.
Acknowledgment and Acceptance Clause
An acknowledgment and acceptance clause in commercial contracts serves as a pivotal element, solidifying the mutual understanding and commitment of the parties involved. This clause explicitly outlines that the parties have thoroughly reviewed the terms of the contract, agree to abide by them, and acknowledge the legal implications of their agreement.
Acknowledgment Clause
The acknowledgment clause, often found towards the end of a contract, is a provision where the parties formally recognize and affirm specific details or obligations within the agreement. This acknowledgment reinforces mutual understanding and helps prevent disputes by establishing a shared perspective on essential elements of the contract.
Assignment
The transfer of rights, benefits, or obligations under a contract from one party to another. It should be documented in writing and agreed upon by all parties involved.
Arbitration Clause
A dispute resolution mechanism where an independent third party, the arbitrator, makes a binding decision on the dispute between two or more parties. It is less formal than litigation and is commonly used in international contracts.
Amendment
A change to a contract that alters its terms, conditions, or provisions. Amendments can be made to modify, add, or remove clauses in the original agreement. They should be agreed upon by both parties and signed in writing.
Acceptance Criteria
Acceptance criteria refers to the set of parameters that are agreed upon between the buyer and the seller before the project commences. It outlines the expectations of the buyer in terms of the quality of the product or service, delivery timelines, and pricing. These criteria help in ensuring that the deliverables meet the specifications outlined by the buyer.
B
Break Clause
A "break clause" in a contract provides a stipulated point at which either party can terminate the agreement prematurely. It introduces flexibility by allowing termination before the contract's natural expiration, subject to specified conditions.
Boilerplate
Standardized contract language that is commonly used in many contracts. It includes clauses that are typically included in contracts, such as choice of law, indemnification, and force majeure.
Breach of Contract
Breach of contract occurs when either the buyer or the seller fails to meet the obligations outlined in the contract. The non-breaching party can claim damages as a result of the breach. It is crucial to identify and mitigate the risk of breach of contract through risk assessment, effective communication, and proper contract management.
C
Consequential Damages Waiver Clause
A "consequential damages waiver clause" in a contract limits liability by excluding recovery for indirect or consequential damages resulting from a breach, protecting parties from extensive financial consequences beyond the immediate losses.
Consideration Clause
The Consideration Clause in a contract is a provision that outlines what each party is giving or receiving as part of the agreement. Consideration refers to the value exchanged between the parties in order to make the contract legally binding. This clause is essential for creating a valid contract, as it ensures that both parties receive some form of benefit from the agreement.
Counteroffer
A response to an offer that changes the terms or conditions of the original offer. It is not an acceptance and can lead to further negotiations between the parties.
Confidentiality Clause
The primary purpose of a confidentiality clause is to safeguard a party's valuable information from unauthorized disclosure. Such information may include business strategies, customer lists, financial data, intellectual property, or any other confidential material. By incorporating a confidentiality clause into a contract, parties can establish trust and facilitate open communication while minimizing the risk of sensitive information being misused or leaked to competitors.
D
Disclaimer Clause
A "disclaimer clause" in a contract is a provision that aims to limit or exclude certain liabilities or responsibilities, often by disclaiming warranties, clarifying the scope of information provided, or outlining potential risks associated with the contract.
Drag Along Rights Clause
A "drag along rights clause" in contracts empowers majority shareholders to force minority shareholders to join in the sale of a company. It ensures a unified decision to sell, preventing a minority group from obstructing a beneficial sale to a third party.
Dispute Resolution
The process of resolving disputes between parties in a contract. It can include negotiation, mediation, arbitration, or litigation, depending on the terms of the contract and the severity of the dispute.
Damages Clause
The monetary compensation awarded to a party that has suffered losses due to a breach of contract by the other party. Damages can be compensatory, punitive, or liquidated, depending on the type of breach and the terms of the contract.
E
Exculpatory Clause
An "exculpatory clause" in contracts absolves one party from liability for certain acts or negligence, limiting the other party's ability to seek legal remedies. It aims to allocate risks and protect the exculpating party from potential legal consequences arising from specified circumstances.
Estoppel Letters Clause
An "estoppel letters clause" in contracts involves obtaining written statements from parties affirming certain facts or conditions, preventing them from later claiming a different position. It aims to confirm the accuracy of representations and disclosures made during the contract period.
Exclusive Supplier Clause
An "exclusive supplier clause" in contracts grants one party the exclusive right to supply certain goods or services to another. It prohibits the contracting party from sourcing these items from alternative suppliers during the agreement's duration, ensuring a dedicated and uninterrupted supply relationship.
Early Termination Clause
An "Early Termination Clause" in contracts allows parties to end the agreement before its scheduled expiration date under specific conditions. It provides flexibility in changing circumstances and outlines the terms, triggers, and consequences associated with terminating the contract prematurely.
Easement Agreement Clause
An "easement agreement clause" grants a party the legal right to use another's property for specific purposes. It outlines the terms, conditions, and limitations of this shared property use, addressing issues such as access, maintenance, and restrictions.
Exclusivity Clause
An exclusivity clause is a contractual agreement between the buyer and the seller that grants exclusive rights to one party to provide a particular product or service. It restricts the other party from providing similar products or services to other customers. The exclusivity clause helps in ensuring a steady flow of business and provides a competitive advantage to the party with exclusive rights. However, it is essential to ensure that the exclusivity clause does not violate any competition laws.
Escrow Clause
A mechanism where a third party holds funds or assets on behalf of two parties until certain conditions are met. It is commonly used in real estate transactions, where funds are held until the property is transferred and all conditions are met.
Entire Agreement
A clause in a contract that stipulates that the written agreement contains the entire agreement between the parties and supersedes any prior negotiations or understandings. It is important to ensure that this clause is included to avoid disputes about oral agreements or promises that are not included in the written contract.
F
Force Majeure
A force majeure clause is included in a contract to cover situations in which circumstances beyond the control of either party make it impossible to fulfill the obligations of the agreement. Force majeure events are generally considered to be unforeseeable, such as natural disasters or government actions.
G
General Indemnity Clause
A "general indemnity clause" in contracts obligates one party to compensate and protect the other from specified losses, damages, or liabilities arising from contractual breaches, third-party claims, or unforeseen events. It serves to shift financial responsibility and provide security in contractual relationships.
Governing Law Clause
A governing law clause specifies which law will apply to a contract. This is important because laws can vary from jurisdiction to jurisdiction, and different laws may provide different protections or obligations. The governing law clause may also specify where disputes will be resolved.
H
I
Intellectual Property Clause
An intellectual property clause specifies how intellectual property created or used during the course of the contract will be handled. This can include ownership, licensing, and confidentiality provisions.
Indemnification Clause
An indemnification clause is used to shift the risk of loss from one party to another. The indemnitor agrees to cover any losses or damages suffered by the indemnitee as a result of the indemnitor's actions or omissions.
J
Joint and Several Liability Clause
It is a legally binding provision in a contract that establishes the responsibility of multiple parties for the performance of contractual obligations and the payment of any resulting damages. Under this clause, each party is both individually and collectively responsible for the entirety of the obligations, allowing the non-breaching party to seek full compensation from any or all of the liable parties.
Jurisdiction Clause
A jurisdiction clause specifies which court will have jurisdiction over any disputes arising from the contract. This can be important for parties located in different countries, as the laws and legal systems can vary widely.
K
L
Cap on Liability Clause
A "liability cap clause" in contracts sets a maximum limit on the financial responsibility of a party in case of breaches, losses, or liabilities. It defines the monetary cap, mitigating potential exposure and allowing parties to manage risks within predetermined financial boundaries.
Limitation of Liability
A clause in a contract that limits the liability of a party in case of any damage or loss incurred by the other party. The limitation of liability clause is designed to protect the parties from excessive damages or claims that may arise from the contract. The clause is usually negotiated and agreed upon by the parties before the signing of the contract.
Liquidated Damages
This is a legally binding provision in a contract that predetermines the amount of monetary compensation to be paid by one party to the other in the event of a specific breach of the contract. This clause is commonly included in commercial contracts to provide a predictable and agreed-upon remedy for certain breaches, thereby minimizing the need for litigation or lengthy negotiations.
M
Most Favoured Customer Clause
A "Most Favoured Customer (MFC) clause" in contracts ensures that a party receives terms and conditions equal to or better than those provided to any other customer. It promotes fairness by preventing discriminatory pricing or terms, fostering equitable treatment among customers.
Most Favored Nation Clause
A "Most Favoured Nation (MFN) clause" in contracts grants a party the right to receive terms, benefits, or advantages equal to or better than those extended to any other party. It ensures parity by preventing preferential treatment, fostering fair and reciprocal arrangements among contracting parties.
Material Breach
A material breach occurs when one party fails to fulfill a major obligation under the contract, making it impossible for the other party to receive the benefits of the contract. In such cases, the non-breaching party is entitled to terminate the contract and sue for damages.
N
Notice Period
A notice period in a commercial contract refers to the time period within which a party must give notice to the other party about any changes or termination of the contract. The notice period allows both parties to have enough time to prepare for the changes or termination of the contract.
O
P
Payment Terms
In commercial contracts, payment terms are the provisions that define the details of how and when payments are to be made between the parties. These provisions ensure that both parties agree on the payment schedule, method of payment, and any penalties or interest for late payments.
Q
Quantum Meruit
A legal principle that allows a party to recover compensation for goods or services provided in the absence of a contract or agreement. Quantum meruit is typically used in situations where a party has provided services or goods but the contract is later found to be unenforceable or void.
R
Right to First Offer (ROFO) of Purchase Clause
A "Right of First Offer (ROFO) to Purchase clause" in contracts grants a party the privilege to purchase a specified asset or property before it is offered to third parties. It provides the party with a preemptive opportunity to acquire the subject matter on agreed terms.
Right of First Refusal (ROFR) Clause
A "Right of First Refusal (ROFR) clause" in contracts grants a party the opportunity to match the terms of a third-party offer before the asset or property subject to the offer is sold to that third party. It provides the party with a preemptive right to purchase.
Representations and Warranties
Statements made by one party to another regarding the quality or condition of goods or services being provided. Representations and warranties are usually included in contracts to provide assurance to the other party that they are receiving what they expect.
Renewal Clause
A clause in a contract that allows the parties to renew the agreement for an additional period. The renewal clause may specify the terms and conditions of the renewal or may require the parties to renegotiate the terms.
S
Subrogation Clause
A "subrogation clause" in contracts addresses the rights of an insurer to assume the legal rights and remedies of the insured after settling a claim. It allows the insurer to pursue recovery against third parties responsible for the loss or damage.
Sole Source Clause
Sole source is a term used in commercial contracts to describe a situation where one supplier is chosen to provide a product or service to the buyer, and no other suppliers are considered. In other words, the buyer relies solely on that one supplier for the product or service.
Severability Clause
A clause in a contract that allows the remaining provisions of the agreement to remain in force in the event that one or more provisions are found to be unenforceable. The severability clause ensures that the contract can still be enforced even if certain provisions are struck down by a court.
T-Z
Termination by Either Party Clause
Termination by Either Party in contracts allows either contracting party to unilaterally end the contractual relationship. It provides flexibility, enabling termination without the need for demonstrating fault or specific reasons, offering a simple and unilateral exit option for both parties.
Termination for Convenience (T4C)
A clause in a contract that specifies the conditions under which the agreement can be terminated. Termination clauses may include events such as breach of contract, failure to perform, or insolvency. The termination clause may also specify the notice required before termination can take place.
Termination of Lease Clause
Termination of Lease refers to the conclusion of a lease agreement, marking the end of the tenant's right to occupy the leased property. This can occur for various reasons, including expiration of the lease term, breach of lease terms, or mutual agreement between the landlord and tenant.
Termination with Cause
A ‘Termination with Cause’ clause in contracts allows a party to end the contract if the other party breaches specific terms or conditions. It provides grounds for termination based on defined reasons, typically involving a material violation of contractual obligations, ensuring accountability.
Termination without cause
Termination Without Cause in contracts allows either party to end the contractual relationship without specifying a particular reason. It provides flexibility for parties to exit the contract without the need for demonstrating fault or breach, offering a straightforward and unilateral termination option.
Waiver
A waiver is the voluntary relinquishment of a right or privilege. In the context of a contract, a waiver may be granted by one party to the other, releasing the other party from certain obligations or responsibilities. A waiver can be verbal or in writing, but it must be clear and unambiguous.
Warranty
In commercial contracts, a warranty is a promise or guarantee made by one party to another regarding the quality, condition, or performance of a product or service. It is a legally binding assurance that the product or service will meet certain specified standards, and that the party providing the warranty will be responsible for any defects or problems that arise.