Part Two: Breaking Down Five Common Contract Clauses (With Sample Language)

Earlier this year, we covered some common contract clauses that can be found in agreements that span countless industries. Also known as boilerplate clauses, these provisions touch upon many important aspects of the contractual relationship. Knowing the impact these clauses have on the overall effectiveness and longevity of an agreement can best prepare you to negotiate effectively. Below you will find a breakdown of the five most common contract clauses, as well as some sample clause language:

WAIVER or No WAIVER CLAUSE

A Waiver or No Waiver Clause protects a party from forfeiting any enumerated rights in the contract, for example, the right to enforce a breach. What these clauses typically spell out is that if a party waives a breach or provision in the contract, it doesn't mean they waive all future similar occurrences or forfeit their right to enforce a provision in the agreement. For example, a landlord may waive any late fees for a delayed rental payment, but that doesn't mean the tenant can pay their rent late in the future or otherwise breach the lease agreement.

Sample:

"Waivers. Any waiver by either party of a breach of any provision of this Agreement shall not operate as or be construed to be a waiver of any other breach of such provision or of any breach of any other provision of this Agreement. The failure of a party to insist upon strict adherence to any term of this Agreement on one or more occasions shall not be considered a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Agreement. Any waiver must be in writing."

FORCE MAJEURE CLAUSE

A Force Majeure Clause is meant to remove liability from the parties for natural and unavoidable catastrophes that interrupt the regular course of dealing between contracting parties and otherwise prevents them from fulfilling their contractual obligations. Important to note, in New York State, if the force majeure event isn't explicitly listed in your clause, it will not count. For example, if the clause fails to mention flooding and a flood prevents a party from fulfilling their obligation, they will not be excused under this clause.

Sample:

"Force Majeure. A Party shall not be considered to be in default or breach of this Agreement, and shall be excused from performance or liability for damages to any other party, if and to the extent it shall be delayed in or prevented from performing or carrying out any of the provisions of this Agreement, arising out of or from any act, omission, or circumstance by or in consequence of any act of God, labor disturbance, sabotage, failure of suppliers of materials, act of the public enemy, war, invasion, insurrection, riot, fire, storm, flood, ice, earthquake, explosion, epidemic, breakage or accident to machinery or equipment or any other cause or causes beyond such Party’s reasonable control, including any curtailment, order, regulation, or restriction imposed by governmental, military or lawfully established civilian authorities.”

ASSIGNMENT CLAUSE

An Assignment Clause covers which rights and obligations under the contract may be transferred or "assigned" to another party (typically a third party who was never part of the original contract). Although general contract laws authorize the free transfer of rights and obligations, parties are still able to restrict those rights by contract. Most often, you will see a provision like the one below that authorizes assignment only when there is prior written consent by the other party.

Sample:

"Assignment. Neither this Agreement nor any of the rights, interests, or obligations hereunder shall be assigned by any of the parties hereto (whether by operation of law or otherwise) without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of and be enforceable by the parties and their respective successors and assigns."

NOTICES CLAUSE

A Notices Clause is fairly straightforward and provides the method, format and means of delivering communications between the parties should the contract expect or require such communications. These clauses also often provide exact physical and email addresses where mail can be delivered. For example, if party is required to notify the other of a breach in writing, the Notices Clause will lay out what an effective notice looks like, e.g., in writing and sent via certified mail, return receipt requested.

Sample:

"Notices. All notices, requests, demands and other communications under this Agreement shall be in writing and shall be deemed to have been duly given (i) if delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed, or (ii) mailed by certified or registered mail with postage prepaid, on the third (3rd) business day after the date on which it is so mailed"

CHOICE OF VENUE/FORUM CLAUSE

A Choice of Venue/Forum Clause chooses the exact location or court where the contract can be enforced. This means that no matter where the parties are located, any enforcement action must be brought in whatever court or location is selected in the clause. This is not to be confused with a Choice of Law clause, which selects the laws of a specific state that will be applied when interpreting or enforcing the contract.

Sample:

"Choice of Venue. All actions or proceedings with respect to this Agreement shall be instituted only in any state or federal court sitting in New York County, New York, and by execution and delivery of this Agreement, the parties irrevocably and unconditionally subject to the jurisdiction (both subject matter and personal) of each such court and irrevocably and unconditionally waive: (a) any objection that the parties might now or hereafter have to the venue of any of such court; and (b) any claim that any action or proceeding brought in any such court has been brought in an inconvenient forum."

If you’re have any questions related to these or any other contract clauses or you would like to speak with our experienced contract lawyers, please do not hesitate to call us or schedule a consultation using the button at the top of our website. Hopefully this post can help to demystify some of the language in contracts and give you a leg up during your next negotiation!

Disclaimer: This blog post and similar posts are not to be considered as providing legal advice. The discussion here is meant for educational and informational purposes only and shall not create an attorney-client relationship with the readers of this content.