COMMON CONTRACT CLAUSES

1. Definitions and Interpretations

Defines terms used in the contract and such terms cannot have any other meaning
Interpretation clauses explains how the contractual provisions needs to be interpreted.

2. Scope of the contract

Scope of the contract clause delineates the precise scope of the contract

3. Term
Term clause describes the period of the contract and might also include a renewal and mode
renewal clause.

4. Consideration

Consideration clause details payment and also might include services.

It can also include provisions for periodic price escalation or no escalation.

5. Time is of the Essence Clause

The clause determines whether in contract time is of the essence.

6. Conditions and Warranties

A condition is a major term of the contract which goes to the root of the contract. If a
condition is breached the innocent party is entitled to repudiate (end) the contract and claim
damages. Warranties are minor terms of a contract which are not central to the existence of
the contract. If a warranty is breached the innocent party may claim damages but cannot end
the contract: Identify the Conditions and Warranties when drafting a contract.

7. Assignment Clause
Either party to that contract may:

Assign their rights to a third party (subject to limited exceptions); but

May not transfer obligations arising under that contract to a third party.

8. Confidentiality

Contracts will typically include a clause requiring the parties to protect each other's confidential
information. The inclusion of such a confidentiality clause is imperative in the situations where
the parties' confidential information will be exposed to the other

9. Dispute Resolution

Could be arbitration or litigation, you can envisage the jurisdiction, mode

of appointment of arbitrators, applicable law.
Mediation and conciliation can be included
Procedure for dispute resolution can be detailed.

10. Notice and Communications

Mode of sending Notice and official communications under the contract can
be detailed.

11. Entire Agreement

The entire agreement clause is designed to provide certainty to the
parties that the written agreement they have signed has captured all
terms agreed between the parties and outside evidence cannot be
adduced to vary or supplement the contract

12. Force Majeure

The effect of a force majeure clause is to excuse the affected party from performance under
the contract as long as the force majeure event continues. It should be noted that there is no
legal definition of 'force majeure' and accordingly the precise definition as provided for under
the contract is important.

13. Indemnity
An indemnity is an undertaking to meet a specific potential liability of another.

14. Liquidated Damages

A liquidated damages clause sets out the fixed sum (or calculation of that sum) agreed by
the parties that will be payable on breach by either party. If the figure is deemed by the
courts to be punitive, the clause will be unenforceable

15. Limitation of Liability

Liability of either party can be capped to a certain figure.

16. Termination
It is common is most commercial contracts to see a termination clause which enables the
parties to terminate the contract prior to the expiry of the contract's stipulated term