What Are Contract Terms Examples?

To be legally binding, contract terms examples must have a number of required elements, including:

  • Offer
  • Acceptance
  • Parties who are legally allowed to contract, meaning no minors or people who are mentally incompetent
  • Lawful subject matter
  • Mutuality of agreement
  • Consideration of value
  • Mutuality of obligation
  • Written format, in many instances

Every contract is unique, but certain contract terms are found in most business contracts. Not every term is added to every contract. Most contracts use only the clauses that apply to their subject matter.

People regularly enter into business contracts. These include things like a bill of sale, a sales-related contract, employment contracts and non-compete clauses, joint venture agreements, leases, and much more.

Standardized language used in contracts is known as a “boilerplate”. These provisions usually don't fit anywhere else in the contract and are normally put at the end under the heading of “General” or “Miscellaneous”. However, just because boilerplate provisions are tucked at the end of the contract doesn't mean they aren't important. In many cases, they determine how conflicts are resolved and how the contract is interpreted in court.

Boilerplates are often noticed more when they aren't included in a contract than when they are. If a contract doesn't have a boilerplate provision that states an attorney will get paid if they win a dispute for a breach of contract, neither party will have an easy time finding a lawyer to represent them.

When certain clauses and provisions are added to a contract, it protects the company from legal action and misinterpretation and can even add additional legal rights for the company. There are lots of ways to write a clause for a contract, and you will often see them worded differently. The important thing is the content of the clause, not the exact language.

Provisions don't need to be copied word for word as long as the basic meaning stays the same. Not every contract needs every clause, but it is important to decide what clauses are best to include to protect your business from risks in the contract.

Common Contract Provisions

A common provision for subcontracting would be “Neither party shall have the right to subcontract or assign any part of its obligations under this contract”. This provision prevents either party from moving the whole agreement or giving pieces of it to a third-party business. The clause says that without the consent of all parties involved, an assignment or subcontract would be considered a breach of the contract.

Assignment of a contract often happens if either party is sold and the new company is assigned the existing contract. Unless there is a provision like this in the contract that restricts it, all contracts are presumed to be assignable. If an outside contractor is hired to do the work that a party agreed to do in the contract, that is subcontracting.

A provision that states “Neither party shall have the right to assign or subcontract any of its obligations or duties under this agreement without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed” means that the agreement can only be transferred to another business or person if both parties agree. Parties must quickly say if they consent or not and must have a reason if they choose not to give consent.

A clause that says, “Neither party shall have the right to assign or subcontract any of its obligations or duties under this agreement without the prior written consent of the other party” stops one party from transferring the contract to another business unless they have written consent from the other party. A party doesn't need to have a reasonable reason to give consent.

If a provision is included that states, “Either party may, without the consent of the other party, assign the agreement to an affiliate or to any person that acquires all or substantially all of the assets of a party”, either party can transfer the contract without the consent of the other party as long as the move is to an affiliate company. This clause is important if you are set on having the service provided by the company you originally contracted with.

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