Contracts are the backbone of business relationships, setting the rules, expectations, and protections for both parties. At Berry Smith we help businesses draft, negotiate, and review contracts, but even when we’re involved in preparing the agreement it’s still essential that our clients understand the core clauses that could impact them before they sign.

Why should businesses understand these clauses?

Even with expert legal advice, businesses need to make informed decisions based on a contract’s commercial and legal implications. Understanding the key clauses allows you to:

· Ask the right questions before a deal progresses

· Spot the red flags early

· Align legal advice with your business goals

· Avoid signing up to obligations you weren’t aware of

Legal support is most effective when you’re an informed client. We help you understand the why, how and what if behind each clause: not just what it means in plain English.

Key clauses to watch out for

Not every clause will be critical in every contract. In some cases strategic silence is a better approach, especially when including a certain clause might prompt the other side to push back. That’s why we always assess clauses in context.

However, here are some of the most common clauses to consider:

1. Payment Terms and Pricing

Make sure the contract clearly sets out:

· When payments are due?

· What happens if payments are late?

· Does interest or penalties apply?

· Can prices be reviewed annually?

2. Duration and Rolling Terms

Understand how long the contract will last and what happens when that period ends:

· Is there a fixed start and end date?

· Does the contract renew automatically?

· What notice is required to prevent renewal?

· Can either party review or renegotiate terms before renewal?

3. Termination Rights

Knowing how and when a contract can end is just as important as starting it:

· Is there a notice period?

· What are the consequences of a breach?

· Can either party terminate for convenience?

· What are the exit arrangements?

4. Liability and Indemnity

These clauses allocate risk between the parties:

· Is your liability capped?

· Are you indemnifying the other party for certain losses?

· Could the clause expose you to open ended liability?

5. Intellectual Property

IP clauses are especially important in creative, tech and software agreements:

· Are you granting or receiving a licence?

· Who owns IP created during the contract?

· Are there limits on how the IP can be used?

Who should review?

While businesses may internally check contracts for business alignment, a specialist commercial lawyer should always review a contract to ensure that the terms and clauses are clear, enforceable and legally sound.

At Berry Smith, we work to protect your business by:

· Drafting agreements that reflect your intentions and guard against future disputes

· Identify ambiguous or risky language before it becomes a costly problem

· Ensure key clauses like termination, liability and indemnity are balanced and realistic

· Periodically review your existing contracts to ensure they are fit for purpose

Berry Smith’s Bottom Line

Whether you’re drafting, reviewing or negotiating a contract it’s essential to know what you’re committing to.

At Berry Smith, our commercial team help businesses navigate contracts with confidence. We’ll make sure your agreements reflect your intentions, manage your risks and protect your position. Talk to our team today before small clauses turn into big problems.