5 Sections to Look Out for in a Contract
As an attorney that’s been reviewing and negotiating agreements for almost a decade, I’ve learned a thing or two about the sections that business owners should pay very close attention to. Take a look at these 5 words/sections to look out for in your next contract! 📑
#1) "Perpetuity" or "Perpetual"
This means FOREVER. IMO there are very few instances where a business relationship should go on forever. You want any rights and obligations in an agreement to have an end date. Generally speaking, this word should not be included in your agreements.
#2) Termination Rights
You should be able to get out of the agreement - there has to be an out clause! If you don't see a section or language giving you the ability to terminate the contract, make sure it gets added. There may be a penalty or other triggers that occur if you do terminate and that’s fine, but you don't want to lock yourself into any agreement/relationship.
#3) "Exclusive"
It depends…All in all, giving someone the exclusive right to your work or image isn't always a hard stop. You’ll have to ensure it's appropriate for the relationship and that you’re being properly compensated for this exclusivity. If it means you'll be missing out on other biz opportunities, do a deep analysis before you agree.
#4) "Work for Hire**"
Who will own the Intellectual Property rights to the work that’s being created under this agreement? A contract is key for protecting intellectual property rights. If you are providing services to a client and the agreement contains a "work for hire" section, that means the work you create is made FOR that party and they will own the IP rights to those works. On the flip side, if you’re hiring someone to create something (like a logo), keep this section in mind too as you’ll want to own the rights to what you’re paying for.
** There are so many nuances and exceptions with WFH language that I really recommend speaking with an attorney if you have questions about this in your agreements.
#5) "Mutual agreement of the parties"
You should have the ability to approve of any changes. If there is any language regarding changing contract terms, editing language, drafting future amendments, etc. it should be followed by language stating that those changes can only happen after both parties agree. The other side should not have the ability to change contract language without your permission.
ALL this to say is that contracts are much more intricate and powerful than some business owners realize. Instead of trying to navigate all of the above, it’s always recommended to seek the help of an attorney :)
This post is intended for general informational purposes and is not intended to be, and shall not be relied upon, as legal advice.