Paragraphs at end of contract

In my last post we reviewed a number of provisions that are found in many commercial contracts.  This post will define and discuss several more “boilerplate” provisions, as they can have an impact on your business relationships.

 Severability: These provisions usually read something like this: “if any provision of this agreement is held to be unenforceable, the court may modify it to make it enforceable, and all remaining provisions of this agreement shall remain in full force and effect.” This keeps a contract valid and in effect even if one provision is found to be invalid or unenforceable.

Force Majeure: a force majeure clause excuses a party’s performance under the contract if some unforeseen event that is outside the party’s control prevents it from performing.  A force majeure clause can include many such events, including fire, weather, earthquake, war, terrorist acts, strikes, “acts of God,” etc. This will not apply if the failure to perform is due to that party’s own fault or negligence.

Integration/Entire Agreement: these provisions usually contain language such as “this agreement contains the entire agreement between the parties, and supersedes all prior written or oral agreements, negotiations, or communications relating to the subject matter….”  This prevents a party to the contract from claiming later that the signed contract does not include everything that the parties agreed to, that there were oral understandings or side agreements that also contain items that the parties had agreed to. Be sure that any agreement you are considering contains all of the issues agreed to are contained in the agreement before you sign, especially if it contains an integration provision.

Waiver of Jury Trial: this provision states that the parties agree have a judge, not a jury, hear any dispute that is in litigation and goes to trial. If the legal or factual matters involved are complex, the parties to a contract may not want to take a chance that a jury of lay people may not understand the issues involved.  Instead, they are agreeing that a judge will do better. A party to a contract should evaluate its relative strength compared to the other party, as juries can sometimes be more sympathetic to a smaller company in a legal dispute with a larger one.

Counterparts: Most of the time the parties to a contract are not in the same place, with both signing a single document.  One party may sign a copy and then send it to the other party, either by scanning and emailing, signing electronically using an app such as DocuSign or RightSignature, or even faxing.  The other party may then sign that copy and send it back, so there are two separate originally signed copies, each with just one party’s signature.  A “counterparts” provision says that this is okay, that contracts signed in this way are still valid and binding.

In the third installment of this series I will briefly discuss two types of provisions that are often in business contracts, indemnification, and limitations on liability.  If you have any questions about your contracts or these common provisions, please feel free to contact me.