Common Contract Terms – Part II
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.
Assignment. Whether or not you can assign your contract or lease is often dictated by its terms. Some contracts and leases prohibit an assignment, some allow one party to assign it and not the other, and still others allow an assignment under certain circumstances. This issue often comes up when you are trying to sell your business and the contract or lease does not allow an assignment or have defined a default as a change in ownership. You need to understand the impact of an assignment provision prior to the beginning of the contractual relationship.
Severability. A severability provision often allows for an entire contract not to be voided or unenforceable due to an illegal provision. It allows the illegal provision to be set aside and the remainder of the contract to remain valid and enforceable. This provision comes up more often than one realizes. Often it comes up when it is too late – when you are in that type of situation where a severability provision is needed, but it was not included in the contract.
Attorney’s Fees. Attorney fees provisions are enforceable. However, before including a provision about attorney’s fees you are going to want to think long and hard about the possibility that the attorney’s fees provision may end up with you having to be the one that pays the other side’s attorney’s fees. Attorney’s fees provisions can also get tricky when the provision states that the prevailing party is entitled to attorney’s fees. If you bring a lawsuit against a defendant who then countersues, how is it going to be determined who is the prevailing party if both of you lose some and win some of the claims? As a result, attorney’s fees provisions should be well drafted to take into consideration issues that often crop up in litigation.
Notices. A notice provision informs the parties of their contractual obligation in providing any type of notice required under the contract. Often, the notice requires the parties to provide notice via the United States mail (note: unless the provision requires that notice is sent via certified or registered mail, do not send it that way). People often erroneously believe that they can provide notice via e-mail, which often times is not allowed by the provision. For example, if you are providing notice to your landlord that you are not going to renew the lease via e-mail, unless the lease allows such notice via e-mail your notice will be deemed to be invalid. Notice provisions, like most provisions in a contract, must be exactly followed.
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.