Five Provisions Any Contract MUST Contain
We’re back at it again! As you know if you follow our blog, our law firm works with individuals and small businesses every week to make sure they have a well-tailored contract that fits their business model and purposes. We also help clients every day with enforcement of their contracts. This can mean lawsuits, negotiation, and other forms of conflict. Since we are constantly handling disputes like these, we have deep knowledge as to what provisions must be in any contract that we see. When we see these provisions in our clients’ contracts, we breathe a deep sigh of relief because they allow us to advocate more efficiently and effectively for our clients’ interests.
Number One: THE VENUE CLAUSE
If you have reviewed or signed contracts in your life, you have seen this clause already! The venue clause is a necessity in contracts because it can allow the drafter of the contract to set first what state’s laws apply to this contract. However, just as importantly, the drafter of the contract can assign what county’s court system will be used if any disputes arise out of the contract. This is vital for small businesses in trades such as plumbing or HVAC because you can service a large area of a state, or even multiple states, but you should have a home base venue where you will file and litigate any disputes that can arise out of the agreement. For example, a plumbing company based in Loudoun may perform service in Loudoun, Fairfax, Arlington, Alexandria, Fauquier, Prince William, Clarke County and more! Instead of having to utilize the courthouses over those enormous swaths of Virginia, a well written venue provision allows all lawsuits to be filed in one courthouse.
Number Two: THE ATTORNEY’S FEE CLAUSE
This one is near and dear to our hearts. As your attorneys, we want to fight for your rights afforded to you under your contract. Let’s use the same example as above, if we have a plumbing company client and they have hired us because they performed thousands of dollars of work for a homeowner who has now sold their home and is not responsive to our client’s invoices or communication regarding the payment of the invoice, they look to us to pursue collection of the unpaid debt with every tool we have at our disposal. However, our law firm has to charge for service, and whether we are charging on a contingency basis, as we do in the vast majority of these cases, or an hourly basis, any expended attorney’s fees take money away from our client’s bottom line. With a well written attorney’s fee provision, the bad faith homeowner who is ignoring our client’s invoicing will then be responsible for payment of our law firm’s attorney’s fees instead of the responsibility falling to our client, ultimately reducing their takeaway from what should be the money they are justly owed.
Number Three: THE MODIFICATION OR AMENDMENT CLAUSE
This one is simple! When you have a contract with another party, the wording is chosen carefully. The parties’ respective duties, responsibilities and rights are clear and hopefully everyone has a “meeting of minds.” However, in life, things can change. If one party wants to alter any of the provisions of the contract, it can make things very confusing very quickly! Having a clause in the contract that says any modifications or amendments to the agreement will be made in writing and will be signed by both parties makes sure that only changes that are very clearly accepted and outlined by both parties will be binding and alter the original contractual responsibilities.
Number Four: THE NOTICE CLAUSE
This one is a clause that is often left out of contracts and it can cause major problems between parties. The classic example of a contract that must have a notice clause is a commercial or residential lease agreement. In that type of contract, the notice clause must make clear how the parties share information with each other officially. For example, a tenant must be clear about how they can notify the landlord that they will not be renewing the lease. Or, the landlord must understand how they can notify the tenant about mandatory repairs or maintenance for the property. The clause will detail whether email, mail, or any other form of communication constitutes effective notice for the parties. When the notice clause is clearly defined, many disputes can be avoided altogether.
Number Five: THE LIMITATION OF LIABILITY CLAUSE
Okay even we will admit, this one is complicated. Every different contract and every different business is going to require a specially tailored limitation of liability clause, but they are critically important. For example, a service-provider like an IT company must have limitation of liability clauses to make clear what services they are covering and what they are not, so they will not be liable or held responsible for damages they did not cause or that arose outside of the scope of what they were doing. Another example is in the landlord/tenant realm again – a landlord must limit their liability in regard to what responsibilities they have in different situations involving the negligence of third parties. No two limitation of liability clauses are the same, but they are critical parts of any contract.
These five provisions are BY NO MEANS the only provisions a contract needs to contain. Every contract is different and must be crafted carefully to protect all parties that are signing. Give us a call at Wakefield Law to see if we can help you with your contract, lease, or lawsuit! We’ll be happy to provide a free consultation to see if we are the right fit for you! 703-771-9740.