6 clauses every business contract should have

#1 an entire agreement or merger clause

An entire agreement clause, sometimes called a merger clause, confirms that the contract sets out the full agreement and understanding between the parties on its subject matter.

This means any previous agreements between the parties are replaced by the current contract.

It helps avoid uncertainty about the terms or the legal relationship.

#2 A counterparts clause

When more than one party needs to sign a contract, it is common for each to sign separate copies of the same document. These are then exchanged to put the contract into effect.

This approach is particularly useful when parties are based in different locations or countries.

A counterparts clause confirms that signing separate copies is sufficient to create a binding contract.

#3 A no representation clause

A no representation clause, sometimes called a no reliance clause, states that neither party has made any pre-contractual misrepresentations.

It also confirms that neither party has relied on statements made outside the contract.

However, if the contract itself contains untrue statements, claims for misrepresentation may still arise.

#4 A no waiver clause

A no waiver clause allows a party to enforce their rights under the contract, even if they have not acted immediately after a breach.

Nonetheless, if the contract requires certain steps to be taken within a set timeframe, a no waiver clause will not override those requirements.

#5 A severance clause

A severance clause is to refine prior points made, in other words, if a change in law makes a clause invalid, a severance clause ensures only that part is removed.

This means that there is no grey area and the rest of the contract remains in force.

#6 An exclusion clause

Under English law, third parties may have rights to enforce contract terms.

An exclusion clause can remove these rights, or allow only specific rights for certain third parties.

Talk to Orwins for legal clarity & assistance

If you would like your contracts reviewed to ensure they include the necessary clauses, please get in touch with our commercial solicitors to discuss how we can assist.

We offer consultation and advice on all legal matters relating to your business.