Common Contract Terms
It is important when you are reviewing a contract that you have a basic understanding of common contract terms and the importance of some of those common contract terms.
Governing Law. Just because your business is in Minnesota does not mean that Minnesota law automatically governs. A properly drafted “Governing Law” provision is critical. Without the contract specifying what law governs that may be one of the issues that first gets litigated. In addition, it is essential that the laws that govern do so without giving effect to the conflict of laws principle. Without that language, if there is a dispute that the laws of another jurisdiction apply, then the law that you believe governed may not govern the contract.
Venue. Just because your business is located, for example, in Ramsey County, does not mean that your lawsuit will be heard in Ramsey County state court (note: some counties also have federal court) unless the contract states such. In addition, you need to make certain that the provision includes a consent of the parties to that particular venue.
Waiver. A carefully drafted waiver provision is vital. For example, you generally are going to want to include language about requiring a signed document if a term or condition of the Agreement is waived or estopped. You want to further limit the waiver only as to the specific term or condition waived (otherwise you may have unintentionally waived the entire contract). Similarly, you generally will want to make certain that a waiver is not a continuing waiver or a waiver in the future (otherwise you may have unintentionally made a continuing waiver or waived a term or condition in the future that was not in your best interests to do so). In addition, it is prudent that this provision is drafted so that your failure to enforce the agreement immediately or your failure to enforce similar agreements against others does not constitute a waiver or estoppel of your rights to enforce the agreement in the future.
Entire Agreement. You generally want to preclude any terms or proposed terms that the parties discussed prior to executing the contract. Therefore, it is imperative that this provision clearly states that the contract constitutes the enter understanding between the parties and supersedes any and all prior oral and/or writing agreements and understandings between the parties. You want to be clear also that only the subject matter of the contract is included in this provision. You also would be wise to include that neither party was offered any oral or written promises etc. to enter into the contract.
Spangler and de Stefano, PLLP assists business owners with reviewing and drafting contracts and leases.
The material contained herein is for informational purposes only, and is not intended to create or constitute an attorney-client relationship between Spangler and de Stefano, PLLP and the reader. The information contained herein is not offered as legal advice and should not be construed as legal advice.