Are your commercial contracts fit for purpose?

Irwin Mitchell share their top tips on how to ensure your contract is working for you, not against you. 

Few things can harm your business like a poorly drafted contract producing unwanted consequences. Whatever the size of your business, you need to ensure that your commercial contracts are fit for purpose and that they clearly set out the intentions of all parties involved.

A vital first step is to conduct a review of the main terms which make up your contracts:

• Check the term of the agreement: how long the contract runs, if there is a minimum term, and whether it renews automatically.
• Under what circumstances does a party have a right to terminate the contract? Can one party terminate at their convenience at any time without providing a reason?
• Payment terms are key provisions that set out how and when invoices are payable, and the consequences of non-payment for example, applicable interest rates, or the right to terminate.
• IP assignment: if intellectual property will be created during the term of the contract it is important to clarify which party will own it and to make sure you are not assigning your IP without realising it.  
• Indemnities are contractual promises to cover the other party’s loss from your actions such as breach of confidential terms or intellectual property infringement. Check whether you have given any indemnities to another party, and what its terms and limits are.
• Without a limitation of liability clause, there is no financial limit on the damages other parties can recover from you. Make sure you set a financial limit and list the types of breach you are/are not liable for.

Irwin Mitchell is unlike any other law firm. Nationally acclaimed, with a strong international capability, we offer a broad range of legal services to national and international organisations and institutions, small and medium-sized businesses and private individuals. We work with many clients in Brighton and Hove and so please do not hesitate to get in touch with Aurelia Butler-Ball should you require our assistance: Aurelia.Butler-Ball@IrwinMitchell.com

Irwin Mitchell are sponsoring our Business Leaders Lunch with Mark Driver.

Thanks to Aurelia for writing this blog 

If you want to contribute to the Chamber blog, contact us on hannah@brightonchamber.co.uk