Question 1

Why should I have an attorney draft my business contracts?

Accepted Answer

A well-drafted contract protects you when the relationship breaks down — and business relationships break down more often than people expect. An attorney who is also a litigator knows which contract provisions lead to disputes, how courts interpret ambiguous language, and how to draft provisions that will be enforced as intended. The cost of having a contract properly drafted is almost always far less than the cost of litigating a dispute over a poorly drafted one.

Question 2

What should every commercial contract include?

Accepted Answer

Every commercial contract should clearly identify the parties, describe the obligations of each party with specificity, address payment terms, specify the term and termination rights, include representations and warranties appropriate to the transaction, address what happens on breach, include a dispute resolution provision, and specify the governing law. Depending on the nature of the transaction, additional provisions — confidentiality, intellectual property ownership, indemnification, limitation of liability — may also be essential.

Question 3

What is a limitation of liability clause?

Accepted Answer

A limitation of liability clause caps the amount one party can recover from the other for breach of contract or other claims. These clauses are common in commercial contracts and can significantly affect your ability to recover damages if the other party breaches. Before agreeing to a limitation of liability, you should understand what it means for your potential recovery and whether it is appropriate given the nature of the transaction.

Question 4

What is an indemnification clause?

Accepted Answer

An indemnification clause requires one party to compensate the other for losses arising from specified events — such as the indemnifying party's breach of the contract, negligence, or third-party claims. Indemnification clauses can be one-sided or mutual. They are among the most heavily negotiated provisions in commercial contracts because they can significantly shift risk between the parties.

Question 5

What is a force majeure clause?

Accepted Answer

A force majeure clause excuses a party's performance when an extraordinary event beyond its control — such as a natural disaster, pandemic, or government action — prevents performance. The scope of force majeure clauses varies widely. A well-drafted force majeure clause specifies which events qualify, what notice is required, and what happens to the contract if the force majeure event continues for an extended period.

Question 6

What is the difference between a warranty and a representation?

Accepted Answer

A representation is a statement of fact made at the time of contracting — for example, that the seller owns the goods being sold. A warranty is a promise that a fact will remain true — for example, that the goods will conform to specifications for a specified period. Both representations and warranties can give rise to breach of contract claims if they turn out to be false. The distinction matters for remedies and the applicable limitations period.

Question 7

Should my contracts include an arbitration clause?

Accepted Answer

Arbitration clauses require disputes to be resolved through private arbitration rather than court litigation. Arbitration can be faster and less expensive than litigation for some disputes, but it also limits discovery, eliminates the right to a jury trial, and makes it harder to appeal an unfavorable decision. Whether an arbitration clause is appropriate depends on the nature of the transaction and your risk tolerance. We advise clients on the pros and cons of arbitration for their specific situation.

Question 8

What happens if a contract is ambiguous?

Accepted Answer

When a contract is ambiguous — meaning it is susceptible to more than one reasonable interpretation — courts apply rules of contract construction to determine the parties' intent. Courts look at the contract as a whole, the circumstances surrounding its formation, and the parties' course of dealing. Ambiguous contracts frequently lead to expensive disputes. The best way to avoid ambiguity is to have contracts drafted by an experienced attorney who writes for clarity and enforceability.

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