Here are some samples of standard clauses that should be included in all contracts. It is recommended that for any contract of significant value or importance, legal advice be sought.
Governing law and jurisdiction
“This Agreement is governed by the laws of New South Wales.”
“The parties submit to the non-exclusive jurisdiction of the courts of New South Wales in relation to any proceedings in connection with this agreement.”
Legal concepts and drafting differ from place to place depending on the governing law. Usually, the agreed governing law will have a substantial or predominant connection with the place of the agreement.
The need for this clause is even more pronounced where parties are from different countries. In the absence of an appropriate governing law clause, the result may be contrary to the intention of the parties.
The second paragraph of the clause as to jurisdiction provides certainty because it has been agreed that at least one court can determine any dispute.
Entire agreement
“This document is the entire agreement between the parties in relation to its subject matter. Neither any negotiations between them nor any document agreed or signed by them prior to the date of this document in relation to its subject matter is of any contractual effect.”
The purpose of an such a clause is to confirm that the agreement ultimately reached is completely dealt with in that document and that any prior agreements, understandings or negotiations in relation to that subject matter are superseded by the signed document.
Severability
“If any provision of this agreement is prohibited, invalid or unenforceable, that provision will be ineffective to the extent of the prohibition, invalidity or unenforceability without invalidating the remaining provisions of this agreement unless it materially alters the nature or material terms of this agreement.”
The purpose of such a clause is to seek to ensure that an invalid clause does not render an entire agreement invalid. However, if the severed clause is central to the commercial arrangement agreed upon, then such a clause not be appropriate or it may require alteration in that regard.
Counterparts
“This agreement may be signed in any number of counterparts which, when taken together, will constitute the agreement.”
The purpose of such a clause is to enable an agreement to be signed in multiple places and times, avoiding the need for all parties to be present at the same place and time, which in many instances is neither physically or commercially practical.
Notices
“All notices to be given under this agreement must be in writing and sent by personal delivery, fax or email to the address of the relevant party…”
This type of clause describes way to give notices and would normally include provisions as to when notices are deemed to be served depending on the mode of delivery of the notice.
No waiver
“Failure by a party to exercise or delay in exercising a right, power or remedy under this agreement does not prevent its exercise at a later time.”
This sort of clause seeks to ensure that a party is not deemed or implied to have given up its rights (only rights stated in the agreement) without expressly doing so. Otherwise, it may be open to infer consent if nothing is done in relation to that right.
All clauses regardless of how standard or simple an agreement may be should be considered on a document by document basis to ensure they are appropriate to the relevant agreement.
