5 Questions Every Business Owner Should Ask About Their Contracts
1. Does the contract contain a clear limitation of liability clause?
These are an effective way to cap the total amount the company might face in the event of a breach of contract or other situation giving rise to litigation.
2. Does the contract contain an arbitration clause?
Arbitration clauses are enforceable and are worth considering given that arbitration is more efficient, certain, and economical than litigation and jury trials.
3. Does the contract contain a clear, specific, enforceable consequential damage exclusion?
Such an exclusion can eliminate or limit potential exposure for additional damages such as substitute housing, damage to personal belongings, and damage for alleged emotional distress and mental anguish.
4. Does the contract give the company the option to terminate the contract in its sole discretion?
These are important issues which should be clearly addressed in the contract.
5. When was the last time the contract was reviewed by an experienced attorney?
If it has been more than 2 years, you should have the contract reviewed by an experienced attorney to insure that any revisions necessary to address changes in the law are made.