The contract for the sales of goods fails to provide an opportunity in case either party wishes to terminate the contract. There is a possibility that either the seller or the buyer might desire to terminate the contract based on a number of reasons which include: the buyer finding another supplier whose price is cheaper, the seller finding another buyer who is willing to pay slightly more than the current buyer, the seller might get another supplier who has products of better quality than the buyer.
Inappropriate ways of resolving disputes
The contracts are quick to offer litigation as a way of settling disputes between the two parties in case of a disagreement or contract breach. Litigation is a very expensive process that can be a burden to a small business or start up business (McCarthy, 2015). Instead of litigation, meditation should be advocated for; this is because meditation agreements are binding and cost efficient to the parties.
Failure to clarify what constitutes a breach of the contract
It is wise to think about what might make the parties end their contract. This is important because it could help avoid a possible horrible outcome between the parties regarding their agreement. It also allows you to have a solution to a bad outcome. It enables processes for dealing with bad outcomes clear to the parties who signed the contract. This also helps the parties to behave according to as per the agreement.
Failure to indicate a venue in case of dispute resolution
Each of the contracts fails to mention where a dispute resolution can be conducted; this is a vital element of a contract. The parties who sign a deal might be residing in different states; a clear indication of where the dispute resolution can be conducted is advantageous to the parties; as it will be convenient for both parties (Abraham " Banai, 2015). Also, measures such as resolving disputes without the requirement of the physical presence of both parties can be considered for convenience purposes.
Failure to assign the contracts
Before signing a contract, it is important to acknowledge that the company with which you are signing a contract with can be absorbed or can merge with another company. In case of the company being acquired by another company, they will consider whether or not they will retain the company’s contracts before the acquisition. It is essential for a business to make sure in case such a thing happens that the agreement can be assigned; this is essential to retaining a company’s business.
It fails to consider how the contract relates to future or prior contracts between the parties
In case of the parties have signed another contract with, the deal should take note and state that it replaces the other agreements signed between the parties. This is vital as it prevents the parties from using other conversations between the parties as a means of undermining details of a contract. This can bring about the confusion between the parties.
Failure to consider all negotiable issues
Both the contracts lack problems that can be negotiated among the parties. As opposed to highlighting the few key terms that are the basis of any given negotiation between the parties, it is important to note all the negotiation terms (Frank " Caroline, 2018). This is important because, in case of negotiation, the first step usually entails breaking out all variables useful in the negotiations.
Clauses missing from the contracts
Merger clause
The clause "this agreement replaces and supersedes all other agreements between parties" is important in a contract as it clarifies the agreement between the parties if they signed a previous contract to reduce on misunderstandings between the parties (McCarthy, 2015). Its works are to merge existing and new contracts between parties.
Attorney fees clause
This clause usually states in case of litigation as a way of solving disputes; the losing party is required to pay for attorney’s fees to the wining party; this may also include other court fees.
Liquidated damages clause
This allows the party that did not breach the contract to recover damages; this is because actual damages tend to be difficult to approximate. The liquidated damages, however, need to be reasonable. Some states have limits on some of the purported liquidated damages (Ken, 2018).
Time of performance clause
This clause indicates the time frame which allows for contract duties to be performed or not. A number of contracts state that "time is of the essence" this is to mean that lawsuits can be filed at any given time as from the breach of the contract.
The statute of limitations clause
This clause defines the time frame that a lawsuit can be filed after breaching of a contract by one of the parties or violation of the contract. This implies that some lawsuits can be invalid as per the time of performance clause that is stated in the contract. This clause, however, doesn’t violate laws and filings that already exist.
Severability clause
This clause plays an important role in a contract such that, it ensures that a remaining part of a contract is still enforceable even though some part of the document can be rendered invalid. If a contract is devoid of this clause, it will make it possible for the contract as a whole to be termed as invalid by the court if a segment of the contract is invalid (Ken, 2018). It can also be referred to as the savings clause.
Non-waiver clause
This clause plays an important role in protecting parties who are lenient on the other party for not performing the contract terms. This can be seen if the other party fails to make the complete payments to the non-breaching party which doesn’t see a need to file a law suit, then this contract allows them to recover the unfinished payments from the other party which is breaching the contract.
References
Abraham, S., " Banai, M. (2015). Negotiators' attitudes Towards Signing Business contracts: Evidence from Greece and Isreal. Thunderbird International Business Review, 391-409.
Frank, Z., " Caroline, M. (2018). Unfair Small Buisness Contracts legislation gets its Day in Court. AUSTRALIAN JOURNAL OF COMPETITION AND CONSUMER LAW, 270-305.
Ken, L. (2018, June 3). Common Clauses In a Contract. Retrieved April 24, 2018, from LEGALMATCH: http://www.legalmatch.com/law-library/article/common-clauses-in-a-contract.html
McCarthy, K. (2015, January 29). 10 Common Mistakes in Buisness Contracts.
Retrieved April 24, 2018, from McCARTHY GARBER LAW: https://www.mccarthygarberlaw.com
