|
|
Practical
Guide to Understanding a Contract - Pt 2
Operative Provisions
Definitions
The definitions are used mainly for interpretation or to avoid
ambiguity but they are also used to prevent the necessity for
repetition of long sentences or lists of words. A sentence can
be defined in one word, and if a capital letter is used for
the word it is an indication that when found in the body of
the contract, it has a definition in clause 1.
General Terms
Although not convention, in some contracts general terms are
put at the beginning, in clause 2 for example. The general terms
will consist of the 'entire agreement' clause, changes, alterations
and variations clause, the 'notice' clause and a clause stating
that the headings and definitions are for information only.
The notice clause here states where the 'notice' is required
to be sent and by which method e.g., fax, registered letter,
etc. For the avoidance of doubt, this clause must not be confused
with the 'Notice Period' that gives you 30 days before the end
of the contract.
Main Commercial Provisions
These provisions deal with the main commercial issues such as
the rights and obligations of the Supplier and, in a separate
clause, the rights and obligations of the agency. Following
these clauses would be a clause for the payment terms. These
are the main issues.
Secondary Commercial Provisions
Any other commercial provisions for example, warranties, confidentiality,
intellectual property, indemnity and termination clauses follow
on from the main provisions.
Boilerplate Clauses
These provisions are the miscellaneous standard clauses which
appear in almost all contracts. These clauses might include
severability, waiver, force majeure and jurisdiction. To explain
these clauses briefly:
Severability - this clause may state that the court can
sever or take out a term or condition of the contract which
is invalid, void or unenforceable without it affecting the effectiveness
of the remaining provisions.
Waiver - this clause would state that the failure to exercise
or enforce a 'right' at a certain time would not bar the party
from exercising their right at a later date.
Force Majeure - deals with the prevention or delay of
performance of the obligations under the contract. This clause
can only be used where there is a 'major force' affecting the
performance of the contract typically, an Act of God, war, riots,
strikes, floods, storms, etc.
Law and Jurisdiction - deals with the law which governs
the agreement and whether that law governs exclusively or not.
For example you would want the law of your country, English
law, to be the law used to decide any conflicts in the contract.
In fact, even in international commercial contracts where neither
country is English, they often use English Law. The jurisdiction
can either be exclusive to the English courts or non-exclusive.
Schedules
If there are schedules which are to be attached to the contract,
which in a contract for services there usually are, the existence
of the schedule should be written into the main body of the
contract. This prevents either party from denying it's existence
at a later date.
Page: 1 - Back
|
|
