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Five Key Clauses in Business Contracts

Published:  February 1, 2019


Business contracts almost always contain “boilerplate” clauses, meaning clauses that are deemed not essential to the agreement. However, those “boilerplate” clauses can have a material effect on your business. The lesson, as always, is to make sure you understand every aspect of the agreement before you sign it. Here are five common boilerplate clauses:

  • Mandatory Alternative Dispute Resolution (ADR): Mandatory ADR provisions are common in contracts and can cause an unexpected surprise. If a mandatory ADR clause is in your contract, you could be waiving your right to settle a dispute in court and instead could find yourself resolving a dispute with an arbitrator or mediator.
  • Choice of Laws: It is very common for contracts to contain a provision that the contract will be interpreted in accordance with the laws of a particular jurisdiction. Different jurisdictions can have different views of the law, so it is important to understand the view of the jurisdiction included in the contract
  • Venue: It is also very common for a contract to mandate the specific venue where a lawsuit can be brought. It is important to be aware of this provision, or you could find yourself in a court room far away from your place of business.
  • Interest: You also need to be aware of the interest rate provided by the contract. In the absence of a stated interest rate, a Massachusetts court can impose an interest rate of 12% per annum on any amounts due under the contract.
  • Attorneys Fee: As a general rule, each party is responsible for bearing the cost of their own attorney fees. There are two exceptions, (1) in the event a statute provides for attorney fees to be awarded and; (2) when a party agrees to be responsible for attorney fees in a contract. In the event litigation is necessary, an award of attorney fees to a prevailing party can add a substantial amount to a judgment.

If you have any questions regarding a contract, or any aspect of employment law, please contact the attorneys at Royal, P.C.

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