Pertinent Clauses in the Contract
1. Force Majeure Clause. A contract provision that
allows a party to suspend or terminate the performance of its
obligations when certain circumstances beyond their control
arise, making performance inadvisable, commercially
impracticable, illegal, or impossible.1
Example: “Neither party can be considered in default
under this Contract if the performance of its obligations in
whole or in part is delayed or prevented by following a force
majeure situation. Force majeure is an external event,
unforeseeable, irresistible and it absolutely impossible to fulfill
an obligation.”2
2. Arbitration Clause. A clause in a contract that
requires the parties to resolve their disputes through an
arbitration process.3
Example: “The parties expressly agree to abide by any
and all rules of ARS as found in their web site at
[Link]. In the event that a party fails to pay
any award, the award may be converted to judgment in a
Court of competent jurisdiction.”4
3. Indemnification Clause. This is a clause in contracts
that set out to protect one party from liability if a third-party or
third entity is harmed in any way.5
Example: “Mastandrea and the Company, upon full
settlement and payout of this agreement, agree to mutually
indemnify each other against any and all future claims.”6
4. Assignment Clause. A term included in business
contracts that grants a person or a business the opportunity to
assign or completely transfer their contract obligations, rights,
and benefits to a separate entity (person or business).7
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Example: “Contractor shall not assign or transfer in any
way any or all of its rights, burdens, duties, or obligations
under this Contract without the prior written consent of the
District.”8
5. Confidentiality Clause. Simply put, a confidentiality
clause is a legally binding agreement that places an obligation
on one or both parties to keep specified information
confidential.9
Example: “Subject to the duties of the Adviser, the Trust
and the Subadviser to comply with applicable law, including
any demand of any regulatory or taxing authority having
jurisdiction, the parties hereto shall treat as confidential and
shall not disclose any and all information pertaining to the
Fund and the actions of the Subadviser, the Adviser and the
Fund in respect thereof.”10
6. Warranties. Put simply, a warranty is a contractual
statement of fact made by the warrantor to the warrantee
which is usually contained in a share or asset purchase
agreement.11
Example: “Each party represents and warrants that it
has the right, power and authority to enter into this Agreement
and that the persons executing this Agreement have the
authority to act for and to bind each respective party.”12
7. Choice of Law and Forum Selection Clause. This
allows the contracting parties to choose the substantive law of
the appropriate province or territory (or foreign jurisdiction) to
apply to the contract.13
Example: “The exclusive venue of the resolution of any
dispute arising from the provisions of this Agreement shall lie
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provisions
with any court of competent jurisdiction in the city of
Richmond, Virginia.”14
8. Time is of the Essence Clause. One party to the
contract must perform its contractual obligations at a specific
date and time as required in order to compel performance by
the other party to the contract.15
Example: “The parties agree that, in the event that any
date on which performance is to occur falls on a Saturday,
Sunday, or state or national holiday, then the time for such
performance shall be extended until the next business day
thereafter occurring.”16
9. Severability Clause. Provides that each provision of
the contract is independent of all of the others so that if a court
invalidates any of the clauses, the rest of the contract remains
valid.17
Example: “In case any provision in this Indenture or in
any Security or coupon shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the
remaining provisions shall not in any way be affected or
impaired thereby.”18
10. Liquidated Damages Clause. A contractual
provision requiring a party in breach to pay a pre-determined
amount to the other party as compensation for the breaching
party's failure to perform a specific task or comply with a
particular duty or obligation.19
Example: “In light of the difficulties in estimating the
damages for an early termination of Executive’s employment
under this Agreement, Company and Executive hereby agree
that the payments, if any, to be received by Executive
pursuant to this Article 5 shall be received by Executive as
liquidated damages.”20
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