Contract clauses, one at a time

Boilerplate clauses in a contract

• Arbitration clause with a Singapore seat: a SIAC sample

  Choosing Singapore as the seat of arbitration puts a contract's disputes under Singapore's International Arbitration Act, which gives the UNCITRAL Model Law force of law, and under the Singapore courts' supportive supervision. A clause adopting the SIAC rules, one or three arbitrators and English, with the governing law stated separately, is the usual starting point for Asia Pacific deals.

• Arbitration clause: a private, binding decision instead of a court

  Arbitration is chosen for three reasons: a neutral forum between parties from different countries, a decision maker with industry expertise, and privacy. A badly drafted clause can lose all three and add a court fight about what the clause meant.

• Assignment clause: who else may step into the contract's benefits

  A contract is signed with a counterparty someone has checked, and nobody wants to wake up owing performance to a stranger or depending on one. The assignment clause is where each side decides how much of that choice it keeps once the business behind the other signature changes hands.

• Attorney fees clause: a prevailing party sample

  In the US each party normally pays its own lawyers, win or lose. An attorney fees clause changes that for disputes under the contract, usually letting the prevailing party recover reasonable fees. California and Florida go further: by statute, a clause that favours only one side is read as working both ways.

• Class action waiver clause: individual claims only

  A single customer rarely sues over a $15 overcharge, but a class of a million customers might. A class action waiver, paired with arbitration, removes the class route, which is why it is one of the most consequential paragraphs in consumer terms of service.

• Costs clause: each party bears its own costs, and the exceptions

  A costs clause answers a small question that causes surprising disputes: who pays the lawyers and the fees for the contract itself. The usual answer is that each party pays its own, but leases, loans and settlement deeds carve out duty, registration and enforcement costs, and the law limits what some parties can pass on.

• Counterparts clause: separate copies, one agreement

  Signing in counterparts is how a contract gets done when two signatories are in different cities on the same afternoon. The clause itself is short; the questions it answers about exchange and effective date are the ones that decide whether a deal is actually done.

• Dispute resolution clause: the ladder before anyone goes to court

  Most contract disputes are settled by people who know the project, provided someone makes them sit down before lawyers are briefed. A tiered clause forces that conversation to happen early and on a timetable, while keeping the door open for urgent court orders.

• Electronic signature clause: agreeing in the contract how it will be signed

  Laws in Australia, the United Kingdom and the United States already allow most contracts to be signed on screen. The clause does a narrower job: it records consent to a particular method in advance and fixes the evidence both sides will accept if a signature is later denied.

• Entire agreement clause: the written contract is the whole deal

  Negotiations produce proposals, revised quotes and assurances made over coffee, and a year later each side remembers them differently. The entire agreement clause fixes the contract to the pages that were signed, which is exactly why it has to list every page that should count.

• Forum selection clause: choosing the court in a US contract

  A software company in Delaware and a customer in Texas both prefer to litigate at home. A forum selection clause settles that before any dispute arises, and federal courts give it strong weight once it is in the contract.

• Further assurances clause: signing whatever else the deal needs

  Contracts transfer rights on paper, but registers, banks and overseas offices often want their own forms signed by the original owner. A further assurances clause makes sure the person who has already been paid still has to pick up the pen.

• Governing law clause: choosing the law that reads the contract

  A Sydney supplier and a Melbourne client can sign the same words and still face different limitation periods and statutory rules depending on which state's law applies. Two lines at the back of the contract settle that before there is anything to argue about.

• Joint and several liability clause: each liable for the whole

  When two people sign a lease or a loan together, the lender or landlord does not want to chase each for half. A joint and several liability clause lets it recover everything from whichever of them can pay, and leaves the co signers to settle up with each other.

• Jurisdiction clause: picking the courts before the dispute

  Winning a judgment is only useful in a court whose orders can reach the losing party's money. Jurisdiction clauses are negotiated with that in mind, which is why lenders and landlords draft them very differently from service providers.

• Jury waiver clause: giving up a jury trial before a dispute

  Businesses often prefer a judge to a jury for contract disputes: judges are seen as more predictable on complex commercial facts. A jury waiver clause records that choice, and its capital letters and separate initials exist to prove it was made knowingly.

• Mediation clause: a required attempt at settlement before litigation

  A mediation clause only works if it can be started on a bad day, when one party does not want to cooperate. The mechanics of appointment, timing and cost are therefore the whole clause, not the fine print.

• No oral modification clause: changes only in signed writing

  Business relationships run on phone calls and quick agreements. A no oral modification clause says none of that changes the contract unless it is written down and signed, and since 2018 English law takes the clause at its word.

• Notices clause: how a formal notice is sent and when it lands

  Contract rights often depend on a notice arriving by a date, and the other party has every reason to say it never did. A deemed receipt rule replaces that argument with arithmetic.

• Novation clause: agreeing now to swap a party later

  Novation cannot be imposed on anyone, so a party who knows a swap is coming wants the consent locked in before the project starts. On construction and outsourcing projects that planned handover is common, and the clause is what stops the remaining party using its signature as leverage.

• Relationship of the parties clause: no partnership, no agency, no employment

  Two businesses sharing customers, a brand or a revenue split can look like partners to an outsider, and a worker paid by invoice can still be an employee. This clause is where the parties say what they intend, while knowing a label on its own settles nothing.

• Severability clause: keeping the contract alive when one term fails

  Contracts fail in pieces far more often than they fail whole, and restraints, penalties and one sided terms are the usual casualties. A severability clause decides whether losing one of those pieces takes the rest of the document down with it.

• Successors and assigns clause: what it does and does not do

  Almost every US commercial contract ends with a sentence about successors and assigns, and many readers assume it lets either party hand the deal to someone else. It does not. It only makes sure that whoever properly steps into a party's shoes is bound and benefits.

• Variation clause: the rule for changing the contract later

  Every long contract will need to change, and the danger is not the change itself but uncertainty about whether it happened. The variation clause decides what counts as a change before anyone relies on a phone call or a line in a meeting note.