Most business disputes do not begin in a courtroom — they begin with a contract that was silent, ambiguous or one-sided. Taking the time to review a handful of key clauses before you sign can prevent costly misunderstandings and put you in a stronger position if things go wrong.
Key points
- Clarity on who is contracting, what is being delivered and when payment is due prevents most disputes.
- Liability, termination and dispute resolution clauses matter most when the relationship breaks down.
- Where more than one currency may be used, state the currency of payment and how any conversion rate is determined.
1. Parties and authority
Identify each party by its full legal name and registration details, and confirm that the person signing has authority to bind the company. Contracting with the wrong entity — or with an individual instead of a company — can make a contract difficult to enforce.
2. Scope of work and deliverables
Describe exactly what is being supplied: the goods or services, quantities, specifications, timelines and acceptance criteria. Vague descriptions such as “consulting services as required” invite disagreement about what was promised.
3. Price, payment and currency
Set out the price, when invoices may be issued, the payment period and the consequences of late payment, such as interest or suspension of services. Where payment may be made in more than one currency, state the currency of payment and how any exchange rate will be determined, to avoid disputes about value.
4. Limitation of liability and indemnities
These clauses allocate risk. A limitation of liability caps what one party can recover from the other, while an indemnity requires one party to cover specified losses. Review them carefully — a broad indemnity or an unusually low cap can leave your business exposed.
5. Termination
Know how you can exit the contract. Good termination clauses address termination for breach (often with a period to remedy the breach), termination for convenience, insolvency events, and what happens on termination — including final payments, return of property and ongoing confidentiality obligations.
6. Force majeure
A force majeure clause addresses events outside the parties’ control that prevent performance. Check what events are covered, whether notice must be given, and whether either party may terminate if the event continues for a long period.
7. Dispute resolution and governing law
Decide in advance how disputes will be resolved. Many commercial contracts provide for a staged process — negotiation between senior representatives, then mediation, then arbitration or court proceedings. State which country’s law governs the contract and, for arbitration, the seat and the rules that apply. A clear clause can save months of argument about where and how a dispute should be heard.
Before you sign
- Read the whole contract, including schedules and any standard terms incorporated by reference.
- Check that what was agreed in negotiations is actually reflected in the document.
- Keep a signed copy and a record of any later variations, agreed in writing.
- Seek legal review for high-value, long-term or cross-border agreements.
Mpofu Law Chambers advises businesses on contract drafting, negotiation and review, regulatory compliance and the resolution of contractual disputes.
