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In the business world around us, technology is evolving at an ever-changing pace. Whether its business opportunities, service delivery or increased use of Artificial Intelligence for instance. However, what all entrepreneurs and business owners should remember, is that there are still some fundamental business principles that, put quite simply, not even the increased use of AI can change.

For example, contracts. Contracts are the cornerstone of business transactions establishing the framework for relationships, obligations, and rights between all parties involved. Furthermore, certain contract terms stand out as pivotal in protecting the interests of businesses by preventing conflicts, mitigating risks, and facilitating profits.

Here is a quick run through of seven of the most crucial contract terms and principles every business owner should be well-versed in:

1. Offer and Acceptance:

The foundation of any contract lies in a clear offer from one party and its unambiguous acceptance by the other. Clarity in these initial terms is crucial, establishing what each party is agreeing to and under what conditions.

2. Consideration:

Consideration refers to something of value exchanged between parties. It can be money, services, goods, or even a promise to act (or not act) in a certain way. Without consideration, a contract might not be legally enforceable.

3. Express and Implied Terms:

Contracts can contain both express and implied terms. While express terms are explicitly stated, many implied terms, whilst never mentioned, can still apply and hold legal weight. Be sure you know what implied terms and regulations may affect your contract.

4. Performance Obligations:

Clearly defining what's expected in terms of performance, quality, timelines, and delivery is critical. This ensures alignment and avoids misunderstandings during the execution of the contract. Think about every part of the services, goods and relationship. What must happen? What are the consequences if performance is late or defective?

5. Termination Clauses:

It can be easy to get into a contract when there is lots of goodwill and a desire to do a deal. Breaking out of a contract can be more complicated and difficult. Including provisions in your contract outlining the conditions and procedures for termination can be essential.

6. Liability and Indemnity:

Contracts will often include clauses outlining liabilities and indemnities. Understanding the extent of any liability and who bears responsibility in case of damages or breaches can be crucial for risk mitigation.

7. Dispute Resolution Mechanisms:

Nobody enters a contract expecting to fall out and argue. But disagreements do happen, and disputes can be painful. Specifying how any potential disputes will be resolved is important. The default position for most contracts is through the courts. But other resolution procedures may be more appropriate, for example, mediation or arbitration. Having a predetermined mechanism can save time and money in resolving conflicts.

Mastering these terms and principles can empower business owners to craft robust agreements, ensuring clarity, protection, and legal enforceability in their dealings. Every business owner should be well-versed in them.

So that’s our round-up of seven of the most important contract terms and principles. However, if you need help, advice or guidance writing, reviewing, negotiating or interpreting contracts that are tailored to your specific business needs, the Company and Commercial Team here at Curwens Solicitors can assist.

Whether you are considering a new contract or need a contract review, require a simple agreement or are making a commercial acquisition, our team can help you and your business prosper.

For further information contact Spencer Laymond on 020 8363 4444.

co-authored by Spencer Laymond, Head of the Corporate & Commercial Department, Curwens LLP and OpenAI’s ChatGPT