General

What are a few notable contract terms with serious consequences?

Contracts are at the heart of nearly every single business relationship and at the center of almost every dispute. The terms parties include in the contract define the promises and obligations of each party. These terms include directions and limitations for handling disagreements, which can have a huge impact on the outcome of litigation.

Most contracts tend to be long, confusing and very specific to the relationship or industry; they certainly do not read like a fiction novel. There are, of course, a few terms and clauses found in many contracts. Listed below are only a few contract terms of which you should be aware when signing a contract.

• Liquidated damages: Parties can set specific damage amounts for a breach at the time the contract is negotiated or signed.
• Special or consequential damages: These are damages above general damages, which could include lost profits stemming from a breach.
• Court costs and attorney’s fees: Some contracts require a party to assume responsibility for all court costs and attorney’s fees incurred by the wronged party.
• Arbitration: This can be an especially tricky clause. Many contracts require parties to submit to arbitration. By signing this term, you may be giving up certain rights to resolve the dispute in a formal court proceeding decided by a judge or jury. Costs can also prove significant.
• Jurisdiction: Some contracts limit the jurisdiction in which a party can bring a dispute. Even if you conduct business in Florida, you may be required to arbitrate in another jurisdiction.
• Time limitations: Florida statutes provide time limitations in which parties can bring a claim based on the contract. The terms of the contract may limit this period.
• Right of rescission: Some contracts include a provision giving parties the right to cancel the contract unilaterally with written notice.

These are only general descriptions and are certainly not intended to be legal advice. If you have a business dispute involving a contract, it is crucial you seek detailed advice specific to your situation.

Source: Floridabar.org, “Legal and Binding Contracts,” Accessed March 24, 2015

Mon Aug 27, 2:31pm