Contract Clause Template: Everything You Need to Know
A contract clause template can help you outline and write your contract more efficiently, allowing you to focus on the overall subject matter of the agreement.3 min read
A contract clause template can help you outline and write your contract more efficiently, allowing you to focus on the overall subject matter of the agreement without getting too bogged down by figuring out how to draft the document from scratch.
Contract Clause Definition
A clause is a specific section or provision that is included in a written agreement or contract. Every clause included in a contract is intended to address specific aspects as they relate to a contract's overall subject matter. Clauses are used in contracts to clearly define the following:
- The duties of involved parties according to the contract terms
- The rights of those parties, according to the contract
- The privileges each party can claim under the contract
A contract clause might be found in various locations throughout a contract. Normally, though, they're going to appear close to the end of the written agreement. A clause might also take on a number of different forms and cover almost every aspect related to the business or commercial interests of the parties involved. One common example of this is the non-disclosure clause that many employment contracts include, in which the employee agrees to refrain from disclosing confidential information belonging to or pertaining to the company they are working for.
Clauses can be enforced, both under federal and local state laws, along with the rest of the agreement in which they are included. A legal document is normally broken down into multiple numbered sections in an attempt to make it easier to navigate the document. These individual sections are commonly referred to as "clauses." Clauses are quite common in:
- Contracts and agreements
- Property deeds
- Settlement agreements
- Other important legal documents
Types of Contract Clause
It can be a good idea to include certain clauses in any contracts or legal agreements you're involved in drafting. Doing so can:
- Reduce the potential for legal action to be taken against you or your company.
- Avoid potential misunderstandings.
- Provide you and your company with certain legal rights that you may not have otherwise.
It's not uncommon to come across clauses that cover the exact same subject matter but are worded and structured completely differently. This is because it's the subject matter that's most important in a clause and not the way it is structured or worded. As long as the common sense meaning remains the same, it's not necessary to use the same wording from one clause to the next, even if they are covering the same issues.
That being said, it is strongly recommended that you include the following clauses in every contract you sign, whether for yourself or on behalf of your company. However, depending on the specific nature of certain contracts, not all of these clauses will be necessary every single time. The most important thing is deciding which business risks exist in the transaction your contract pertains to and to make efforts to either reduce or entirely remove those risks by putting the appropriate clauses into place.
Important clauses that you should at least consider for every contract include:
- Assignment / Subcontracting: Four Alternatives
- Attorney's Fees
- Choice of Law or Governing Law
- Choice of Venue
- Compliance with Laws
- Cumulative Rights
- Force Majeure
- Integration Provision for Entire Agreement
- Limit of Liability
- Relationship of the Parties
- Successor and Assigns
- Termination for Cause
- Termination for Convenience
- Termination on Insolvency
- Warranty Disclaimers
- Written Modification
Clauses in the United States Constitution
You may be surprised to learn that clauses aren't limited to just legal documents. In truth, there are hundreds of clauses in the body of the United States Constitution. These clauses are commonly referred to using their:
- Clause and paragraph numbers
However, a lot of the clauses in the Constitution are so commonly referred to that they've been given their own names. Some of these clauses are:
- The Necessary and Proper Clause, otherwise known as the Elastic Clause
- The Full Faith and Credit Clause
- The Due Process Clause
- The Confrontation Clause
- The Search and Seizure Clause
As you can see, clauses are a common occurrence throughout legal documentation and can be made much easier to work with when you're using a good contract clause template.
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