Contracts – What to know
Contracts form the backbone of any business & corporate environment, everything hinges on drafting a strong contract to be complied with by the parties.
A contract helps people manage their relationships in a formal and legal way to avoid unnecessary conflicts and loss of business.
DEFINITION OF A CONTRACT
- A contract can be defined as an agreement which intends to create a legal obligation between the parties.
- The essence of a contract is that there should be an agreement (consensus/meeting of the minds) between the parties.
- The agreement is normally constituted by one party making an offer and the other party accepting that offer.
Ensure that your Contracts are drafted:
- Appropriately and with a full understanding of your business and the law
- In easy and simple language
- With clear and crisp clauses
- Unambiguous provisions
- Lucid and logical chronology
- Ensuring a viable contract.
When drafting a contract, the following clauses should be highlighted:
- Indemnity (limit your indemnity or cap to a maximum amount)
- Insurance (ensure you have insurance cover for the required insurance, as per the contract)
- Liability (limited your liability to direct damages and cap your liability to a maximum amount)
- Breach (determine when you and the other party can be held liable for breach and what the consequences are)
- Disputes (how will disputes be determined)
- Duration of Contract (determine the duration of the contract and whether there are other clauses which allow for early termination)
- Termination (determine when and how the contract may be terminated)
Written by Cherine Hoffman
Director of CH Legal Consulting