A year into the COVID-19 pandemic, some businesses are still incurring losses due to COVID-related closures and other restrictions. As we shared last April, the possibility of mitigating those losses by relying on a force majeure provision depends on a variety of different factors, including which state law governs your contract, the exact wording of the force majeure clause contained within it, and other facts and circumstances, such as the subject matter of the agreement and/or the foreseeability of the pandemic at the time you entered into the contract.

A common or “boilerplate” provision in commercial contracts is the renewal clause. Typically included in the Term section, this clause dictates if and how the agreement will renew after the initial term ends. When entering an agreement, your position on the renewal provision will likely depend on your role in the relationship (e.g., as either buyer or seller of products/services).

In some agreements, renewal is automatic if neither party opts out in writing. Although automatic renewal terms may be convenient, particularly when your business depends on the seller’s product or license, they may also be costly unless there is a termination for convenience right with a short notice period.

Most companies engage professional recruiters or “headhunters” out of sheer necessity, particularly in highly competitive markets where talented candidates are scarce. Recruiters are able to approach prospects freely, and often, their networks are more robust than those of an internal hiring manager. Notwithstanding such advantages, working with a headhunter can be expensive. To protect this investment, companies should carefully review and negotiate the provisions of their recruitment agreement, which, in most cases, should include the following nine “must-have” clauses:

Commercial transactions often involve the disclosure of proprietary and confidential information by one or both parties to an agreement. To preserve the value of such information, the disclosing party typically expects the receiving party to sign a non-disclosure (NDA) or confidentiality agreement. Although NDAs can vary considerably, when both parties to an agreement wish to protect proprietary information, a mutual NDA will be negotiated.

Virtually all contracts have payment-related provisions which can span a wide variety of ancillary issues, including invoicing, disputes over invoiced amounts, timing of payments, and remedies for late payments. When reviewing these provisions, your position will, naturally, depend on your role in the agreement: are you the vendor collecting payment or the customer making payment? In some situations, such as in co-marketing deals, payments will be flowing in both directions.

Many technology-related service agreements between providers and their customers now include terms beyond the four corners of the document. Specifically, certain contract terms are incorporated as mere hyperlinks to a URL where the provider’s standard terms and provisions are maintained.

It has become fairly commonplace for companies of all sizes and industries to tout a commitment to ethical and socially-conscious business practices as a key differentiator in their respective markets. For example, a clothing company might distinguish itself by its commitment to sustainable manufacturing practices that include waste recycling and efficient water usage systems. Aside from being a means of establishing brand identity, this promise also may help a company attract capital from investors who share a similar sense of social responsibility. Regardless of the reason, companies who choose to adopt standards which exceed basic government guidelines must take appropriate steps to ensure the fulfillment of such promised social and ethical obligations.

Just as the reasons why parties choose to terminate a contract will vary, so too will the nature of the relationship between the parties, as well as the complexity of the original business arrangement. Sophisticated relationships and complex deal terms often necessitate the inclusion of additional provisions in the termination agreement. In Part 2 of this series, we review those terms which are illustrative of a more complex termination arrangement: