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Classwork No.2 - Contract Drafting

This document defines and provides examples of 10 common clauses found in contracts: 1) force majeure, 2) arbitration, 3) indemnification, 4) assignment, 5) confidentiality, 6) warranties, 7) choice of law and forum selection, 8) time is of the essence, 9) severability, and 10) liquidated damages. These clauses address issues such as relieving liability for unforeseen circumstances, settling disputes, allocating risk, transferring rights and obligations, maintaining confidentiality, representing the quality of goods/services, determining applicable law, timing of obligations, upholding the rest of the contract if a clause is invalid, and outlining damages for breach.

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93 views

Classwork No.2 - Contract Drafting

This document defines and provides examples of 10 common clauses found in contracts: 1) force majeure, 2) arbitration, 3) indemnification, 4) assignment, 5) confidentiality, 6) warranties, 7) choice of law and forum selection, 8) time is of the essence, 9) severability, and 10) liquidated damages. These clauses address issues such as relieving liability for unforeseen circumstances, settling disputes, allocating risk, transferring rights and obligations, maintaining confidentiality, representing the quality of goods/services, determining applicable law, timing of obligations, upholding the rest of the contract if a clause is invalid, and outlining damages for breach.

Uploaded by

Heberdon Lita
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Pertinent Clauses in the Contract

1. Force Majeure Clause. A contract provision that


allows a party to suspend or terminate the performance of its
obligations when certain circumstances beyond their control
arise, making performance inadvisable, commercially
impracticable, illegal, or impossible.1

Example: “Neither party can be considered in default


under this Contract if the performance of its obligations in
whole or in part is delayed or prevented by following a force
majeure situation. Force majeure is an external event,
unforeseeable, irresistible and it absolutely impossible to fulfill
an obligation.”2

2. Arbitration Clause. A clause in a contract that


requires the parties to resolve their disputes through an
arbitration process.3

Example: “The parties expressly agree to abide by any


and all rules of ARS as found in their web site at
www.arbresolutions.com. In the event that a party fails to pay
any award, the award may be converted to judgment in a
Court of competent jurisdiction.”4

3. Indemnification Clause. This is a clause in contracts


that set out to protect one party from liability if a third-party or
third entity is harmed in any way.5

Example: “Mastandrea and the Company, upon full


settlement and payout of this agreement, agree to mutually
indemnify each other against any and all future claims.”6

4. Assignment Clause. A term included in business


contracts that grants a person or a business the opportunity to
assign or completely transfer their contract obligations, rights,
and benefits to a separate entity (person or business).7
1
https://contractstandards.com/public/clauses/force-majeure
2
https://www.lawinsider.com/clause/force-majeure
3
https://en.wikipedia.org/wiki/Arbitration_clause
4
https://www.arbresolutions.com/sample-arbitration-clauses/
5
https://www.parsalaw.com/what-is-an-indemnification-clause
6
https://www.lawinsider.com/clause/mutual-indemnification
7
https://www.websitepolicies.com/blog/assignment-clause
Example: “Contractor shall not assign or transfer in any
way any or all of its rights, burdens, duties, or obligations
under this Contract without the prior written consent of the
District.”8

5. Confidentiality Clause. Simply put, a confidentiality


clause is a legally binding agreement that places an obligation
on one or both parties to keep specified information
confidential.9

Example: “Subject to the duties of the Adviser, the Trust


and the Subadviser to comply with applicable law, including
any demand of any regulatory or taxing authority having
jurisdiction, the parties hereto shall treat as confidential and
shall not disclose any and all information pertaining to the
Fund and the actions of the Subadviser, the Adviser and the
Fund in respect thereof.”10

6. Warranties. Put simply, a warranty is a contractual


statement of fact made by the warrantor to the warrantee
which is usually contained in a share or asset purchase
agreement.11

Example: “Each party represents and warrants that it


has the right, power and authority to enter into this Agreement
and that the persons executing this Agreement have the
authority to act for and to bind each respective party.”12

7. Choice of Law and Forum Selection Clause. This


allows the contracting parties to choose the substantive law of
the appropriate province or territory (or foreign jurisdiction) to
apply to the contract.13

Example: “The exclusive venue of the resolution of any


dispute arising from the provisions of this Agreement shall lie

8
https://www.lawinsider.com/clause/assignment-of-contract
9
https://sprintlaw.com.au/what-is-a-confidentiality-clause/
10
https://www.lawinsider.com/clause/confidentiality
11
https://www.ashurst.com/en/news-and-insights/legal-updates/quickguides-warranties-
and-indemnities/
12
https://www.lawinsider.com/clause/general-warranty
13
http://www.leaselawyer.com/cases-and-articles/choice-of-law-and-forum-selection-
provisions
with any court of competent jurisdiction in the city of
Richmond, Virginia.”14

8. Time is of the Essence Clause. One party to the


contract must perform its contractual obligations at a specific
date and time as required in order to compel performance by
the other party to the contract.15

Example: “The parties agree that, in the event that any


date on which performance is to occur falls on a Saturday,
Sunday, or state or national holiday, then the time for such
performance shall be extended until the next business day
thereafter occurring.”16

9. Severability Clause. Provides that each provision of


the contract is independent of all of the others so that if a court
invalidates any of the clauses, the rest of the contract remains
valid.17

Example: “In case any provision in this Indenture or in


any Security or coupon shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or
impaired thereby.”18

10. Liquidated Damages Clause. A contractual


provision requiring a party in breach to pay a pre-determined
amount to the other party as compensation for the breaching
party's failure to perform a specific task or comply with a
particular duty or obligation.19

Example: “In light of the difficulties in estimating the


damages for an early termination of Executive’s employment
under this Agreement, Company and Executive hereby agree
that the payments, if any, to be received by Executive
pursuant to this Article 5 shall be received by Executive as
liquidated damages.”20
14
https://www.lawinsider.com/clause/forum-selection-clause
15
https://www.contractstandards.com/public/clauses/time-is-of-the-essence-general
16
https://legaldictionary.net/time-is-of-the-essence/
17
https://www.globalnegotiator.com/international-trade/dictionary/severability-clause/
18
https://www.lawinsider.com/clause/severability-clause
19
https://content.next.westlaw.com/
20
https://www.lawinsider.com/clause/liquidated-damages

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