Commercial Contracts: Make Sure They Work for You!

12th October 2020 by

By Robert Johnson, Partner – Healys Dispute Resolution

headshot of robert johnson

If there is one thing that this crisis has shown all businesses, whether you depend on the supply or receipt of goods or services, it is the importance of your contracts and insurance policies.

Now more than ever is the time to revisit your commercial contracts and consider:

  • Do your terms and conditions allow for or function correctly in the context of social distancing?
  • Has your business pivoted to more online sales or have you expanded your online presence via social media – if so, do you need to update or adapt your website terms of use and cookie/privacy policies to reflect this?
  • How you might deal with customers or suppliers who may try to get out of their contractual obligations. We have heard a lot about the importance of ‘force majeure’ clauses but a more long term approach could be to consider a change of terms or a freeze on services as an alternative to termination.

Taking the time to revisit your commercial arrangements is an essential step to reduce your risk in uncertain times.

Your contracts also need to set out what is expected of each party and provide protection if things go wrong. Whether you are faced with non-payment or perhaps contracted goods or services fall below expected quality levels your contract should provide a right of recourse.

We have seen, on many occasions, that businesses can be left exposed when there is either no contract in place or there is a lack of clear well-thought-out written terms.

Here are some top tips to bear in mind to avoid uncertainty around the terms of your business arrangements:

  • Does the agreement clearly record all commercial terms – What is the contract for (e.g. the purchase of goods or the supply of services etc.)? When does the contract start and how long will it last? What is the price and when will it be paid?
  • Are the parties obligated to meet certain minimum standards of service or quality? Should the contract provide for an inspection or a review before payment?
  • Does the arrangement rely on the use of intellectual property (either your own or licensed from another party) – should the contract include protections in the event of a breach of your rights or those of a third party?
  • Should there be a limit on your liability or have you agreed that each party’s liability will be tied to a particular level of insurance?
  • Are you sharing confidential information or do you simply not want the other party to disclose the terms of your arrangement?
  • What events or circumstances will constitute a breach of the contract and give you the right to terminate the arrangement?
  • Should the contract include warranties/indemnities or additional security or additional scrutiny?

It is not a legal requirement to engage a lawyer to record all this.  But, if the contract is valuable to you, investing in a lawyer to help you protect that valuable business could be worth its weight in gold.

Healys’ contractual disputes team has the specialism and expertise to assist with all types of contractual dispute. We act for individuals, companies and partnerships in relation to matters ranging in value from a few thousand pounds to multi-million pound disputes.

If you have a commercial contract dispute, or require further information, please don’t hesitate to contact Healys Disputes Resolution solicitors.