It is often the case that when parties enter into contracts be it commercial, employment or residential contracts, signature and agreement takes place without the parties having fully read the terms stated in the contract.
This may be because the contract is difficult to comprehend with the abundance of legal jargon, however it is always advisable that before signing any contract to make sure you understand it’s terms and if you can’t then contact an attorney to do so for you . I say this because in practice, in most cases than not it is because parties haven’t read the full contract thoroughly that often results in disputes and litigation.
So here’s a few VIP clauses that you should be looking out for in a contract before signing it 👇👇👇
- BREACH CLAUSE
The breach clause in any contract or agreement sets out the possible remedies that a party may have against any other party who committed a breach of any one or more terms stated in the contract or agreement. These remedies may include cancellation of the contract, demanding certain performance and even claiming for damages due to the breach.
It is important that as a party to a contract you carefully read this clause to understand what the consequences will be in the event of a breach.
- TERMINATION OF CONTRACT CLAUSE
This is undoubtedly a very important clause in any contract or agreement as it sets out the terms and conditions under which such contract can be terminated.
These clauses can be either drafted in a standard manner or more detailed. If you are entering into an agreement it is always better to request that a detailed termination clause is inserted instead of a standard clause which may result in many unanswered questions.
Also review the clause before signing and decide if you are content with the clause as this will obviously be the most important clause referred to when such contract or agreement is terminated.
Ensure that the clause sets out the reasons that such contract can be terminated or not and what the other party can do if such is enforced.
- SUSPENSIVE CONDITIONS
Be careful to acknowledge and understand certain suspensive conditions that may be included in a contract for example the most common being “This agreement shall only come into force and effect after signature hereof”.
These suspensive conditions mean that terms and conditions set out in the contract or agreement will only become enforceable once the suspensive condition is satisfied and not at any time prior to that i.e.You will not be obligated in terms of the contract for whatever the purpose may be unless and until the contract is signed for example.
- ENTIRE OR WHOLE AGREEMENT CLAUSE
“This agreement constitutes the entire agreement between the parties and supersedes and extinguishes all previous drafts, agreements, arrangements and understandings between them, whether written or oral, relating to this subject matter.”
This clause simply put means the following:
If for example an oral agreement was made prior to the actual or physical contract drafted and said oral agreement was not inserted into the physical contract than such oral agreement would not be enforceable. This is why it is so important to read a contract and agreement carefully because if as a party you are relying on an oral agreement or discussion that Was not inserted into the contract you signed, then you will not be able to enforce it because of this clause above.
- JURISDICTION CLAUSE
If the contract sets out for example that “the parties agree that should any claim arise out of this contract, the High Court shall have jurisdiction” , this would mean that any party who wishes to pursue a claim will have to approach the High Court. Now this may become a problem if for instance you as the party do not have the funds to approach the high court, so therefore be wary of this clause as it can result in a claimant i.e. either party to the contract being dissuaded from pursuing the claim.
- AMENDMENT CLAUSE
This sets out the manner in which amendments can be made to the contract. If the procedure described here is not followed the amendment made will not be valid!
- DISPUTE RESOLUTION CLAUSE
A dispute resolution clause may be added to indicate that should any dispute arise out of the contract the parties agree to first attempt Alternative dispute resolution mechanisms to resolve such dispute. While ADR is valuable, cost effective and beneficial make sure that this clause does not negate or exclude your option to use alternative methods to resolve such dispute i.e. it should not negate the parties option to approach a court for relief.
- FORCE MAJEURE
The global pandemic has forced many people to review their contracts in search for the above clause but why? A force majeure clause in essence deals with how the obligations set out in a contract is affected by “a force of God” or any event arising out of the control of a party that renders performance under the contract impossible, for example a natural disaster, a global pandemic?, a riot or war. For more on this be sure to read my next article!
Based on the above You can now see how important It is imperative that any party to a contract should read through and understand a contract before signing it. It is always better to err on the side of caution! The next time you have to enter into a contract or agreement give us a shout and let us assist you in “legally-proofing” it before you sign it!