1 Clearly define the goods or the scope of services to be supplied thereby reducing the risk of misinterpretation. If the goods or services might change over time then it might be appropriate to cross reference to such goods or services on a separate document, or alternatively, include a clause in the business contract such that the goods or services shall be as notified by the supplier from time to time.
2 The pricing and payment provisions should be clearly specified. If the services are to be supplied on a time and materials basis then the calculation of the fee should be included in the contract. The payment terms need to be clearly expressed particularly where the payment terms are determined by the date of, or date of issue of the invoice. You should also consider including a late payment interest clause.
3 It is important to include the duration of the corporate contract, and also the circumstances upon which it can be terminated, whether with or without case. Without cause means that the contract can be terminated without a reason, and on a specified notice period. With cause means that the contract can only be terminated upon the occurrence of certain defined events, such as breach of contract, or insolvency of a party.
4 Where possible you should try to exclude or limit liability. The general principle is that consequential or indirect loss should be excluded. Direct loss should be capped at the maximum of the contract value. It is not prudent to expose your business to liabilities greater than the financial benefit of the contract. If possible you should refrain from giving any specific contractual indemnities, which could include the quality of the goods or services. You should speak to your commercial solicitors to gain specific advice on limitation of liability.
5 Take out insurance to protect yourself and the business in relation to contractual liability. In English Law it is not possible to exclude liability for death, and in such circumstances you should take out a relevant insurance policy, such as public liability to cover the risk exposure.
6 If the contract involves the development of intellectual property, then the contract should clearly define who will be the owner, and the terms of ownership. It is possible to have exclusive possession and also joint ownership. In addition if you are the owner of the intellectual property, it is also possible to licence it to another party.
Summerfield Browne Solicitors have offices in London, Birmingham, Oxford, Cambridge, Northampton and Market Harborough, Leicester.
