Business Law

Understanding Contract Terms (Post 12): The Waiver Clause

We continue the Understanding Contract Terms series by explaining waiver clauses. Most contracts include some form of a waiver clause. Waiver clauses are important to understanding when contract provisions can be enforced and when certain actions may forfeit your rights under the contract.

What is a waiver clause?

In basic terms, the word “waive” means to give up a right or interest by choosing (intentionally or not) to let the opportunity to enforce the right or interest pass. Simply put, to waive something means to not enforce it.

Waiver clauses, then, are clauses in a contract that govern (1) how a party to the contract can waive a right and (2) what happens when a party to the contract waives the right.

To highlight how a...

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Contracts

5 Contract Clauses to Help You More Quickly Resolve Contract Disputes

The purpose of executing written business contracts instead of relying on oral agreements is to manage risks and expectations. When I draft contracts, my job is to state clearly the parties’ responsibilities under an agreement. My  job is also to prepare my clients for the possibility that things take a turn for the worse and the other party fails to fulfill their promises. A major benefit of having a contract is to help you more quickly and easily resolve a dispute if it arises. Quickly and easily resolving disputes means your business will spend substantially less money dealing with dispute resolution, so it is important for your bottom line that you ensure your contracts are well drafted to prepare you for...

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Contracts

Understanding Contract Terms (Post 11): Counterparts

We continue the Understanding Contract Terms series by explaining counterparts clauses. Most contracts include some form of counterparts clause. Counterparts clauses are important to understand when you need to determine how a contract can be executed and when it is enforceable.

What is a “Counterpart”?

Counterparts, in contract law, are one of several written papers that constitute a contract, such as a written offer and a written acceptance, both of which are separate documents, or counterparts, that together form a contract. In the internet age, it is common for two parties to execute a contract without sitting down in the same room to sign the same piece of paper. Often a contract is executed in several counterparts, each signed by a different...

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Contracts

Understanding Contract Terms (Post 10): Limitation of Liability

We continue the Understanding Contract Terms series by explaining limitation of liability (sometimes called “limitation on liability”) clauses. Many contracts include some form of limitation of liability clause, and they are important to understand to determine your potential liability exposure under your business’ contracts.

Limiting Your Liability A limitation of liability clause allows parties to reduce or, in some cases, eliminate the potential for damages, including direct, consequential, special, incidental, or indirect liability. The limitation clauses can also include a cap on damages should damages flow from a breach of the contract. Often you will see these clauses in boldface type, underlined, or in larger font to make sure both parties are aware of the limitation on liability and damages, and many...

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Contracts

How to Position Yourself to Win a Contract Dispute

Yesterday the Washington Court of Appeals released an opinion providing a good example of how you can position yourself to win a contract dispute. The opinion affirmed a summary judgment awarding more than $300,000 plus fees and interest to GLV International, Inc. against American Rodsmiths, Inc. and its president Robert Scherer.

The Facts of the Case American Rodsmiths purchased more than $300,000 in goods from GLV. American Rodsmiths then failed to pay its outstanding balance. GLV extended credit to American Rodsmiths based on a personal guaranty from the company president, Mr. Scherer. The personal guaranty included a provision awarding attorney fees to GLV if it prevailed in a suit against Mr. Scherer to enforce the terms of the personal guaranty. GLV offered...

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Contracts

Understanding Contract Terms (post 4): Force Majeure

In today’s post, we continue our series on understanding contract terms. In this fourth post, we focus on the term force majeure.

Webster’s Dictionary defines force majeure as “an event or effect that cannot be reasonably anticipated or controlled”—for example, such as hurricane, flooding, earthquake, war, riots, etc. The term is French, and is translated to mean “superior force.”

This term is included in contracts as a way to relieve each parties’ liability or obligation when an extraordinary event occurs or circumstances arise that are beyond the control of the parties and prevent one or both of the parties from satisfying their obligations under the contract. It is most commonly used in insurance, construction, and supply contracts.

Typically, the force majeure clause does...

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Contracts

Understanding Contract Terms (post 3): Severability

In just about every contract you’ll come across, you’ll see the term severability somewhere in the last few paragraphs of the contract. It’s one of those ‘boiler plate’ clauses that most people glance right over when they’re reviewing a contract. However, the effects of this clause are worth reviewing and understanding. In today’s post, the third in our series on understanding contract terms, we explore the definition of severability, and how it may affect your business.

Webster’s Dictionary defines severability as “capable of being divided into legally independent rights or obligations.” Finally, we have a Webster’s definition we can work with. At the root of the definition is the idea of dividing something into parts.

In contract terms, this clause refers to...

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Contracts

Understanding Contract Terms (post 2): Indemnification

Last week we started a new contracts series where we explore common terms you see in various contracts and break them down so you can understand exactly what the term means, and its role in your contract. Today’s post will look into the definition of indemnification.

Webster’s Dictionary defines indemnification as “the action of indemnifying” or “the condition of being indemnified,” which is far from helpful. To indemnify is to “secure against hurt, loss, or damage.” Now we’re getting somewhere.

In simple terms, a typical indemnification clause allows you to seek reimbursement for money that you are forced to pay to a third party as a result of injuries or property loss caused by another person’s actions. For example, let’s say that...

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Contracts

Understanding Contract Terms (post 1): Goodwill

In a new series on the iVLG blog, we’ll take common terms you see in various contracts and break them down so you can understand what exactly the term means, and its role in your contract. In today’s post, we’ll look into the definition of goodwill.

Webster’s Dictionary defines goodwill (in terms of business) as:

(1) the favor or advantage that a business has acquired especially through its brands and its good reputation (2) : the value of projected earnings increases of a business especially as part of its purchase price (3) : the excess of the purchase price of a company over its book value which represents the value of goodwill as an intangible asset for accounting purposes

Successful businesses build a strong brand name, good...

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