Commercial contracts are the backbone of any business relationship. Yet too often, companies rush through the drafting process, leaving out provisions that could protect them when things go wrong. Here are five clauses that every commercial contract should include.
1. Scope of Services and Deliverables
A clear description of what each party is expected to deliver eliminates ambiguity. Define timelines, quality standards, and acceptance criteria. The more precise you are here, the fewer disputes you'll face later.
2. Payment Terms and Penalties
Specify the payment schedule, accepted methods, and consequences for late payment. French law provides for statutory late-payment interest, but contractual penalties can offer additional leverage.
3. Limitation of Liability
Cap your exposure. Without a limitation clause, one party could face disproportionate damages in the event of a breach. Be careful, however — French courts may strike down clauses deemed abusive or unconscionable.
4. Termination Conditions
Define how and when either party can exit the agreement. Include notice periods, grounds for termination with cause, and the consequences of early termination. This avoids messy, protracted breakups.
5. Dispute Resolution
Choose your battlefield. Specify whether disputes will be resolved through negotiation, mediation, arbitration, or litigation — and in which jurisdiction. A well-drafted dispute resolution clause can save months of procedural wrangling.
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