5 Sections to Look Out for in a Contract

As an attorney who has reviewed and negotiated agreements for almost a decade, I have learned a thing or two about the sections business owners should pay close attention to. Here are five words and sections to look out for in your next contract.

1. Perpetuity or perpetual

This means forever. There are very few instances where a business relationship should go on forever. Rights and obligations in an agreement should have an end date.

2. Termination rights

You should be able to get out of an agreement. If you do not see a section giving you the ability to terminate, ask that it be added. There may be penalties or other triggers, but you do not want to lock yourself into an agreement or relationship without an exit.

3. Exclusive

Giving someone the exclusive right to your work or image is not always a hard stop, but it should be appropriate for the relationship and properly compensated. If it means missing other opportunities, do a careful analysis before agreeing.

4. Work for hire

A contract is key for protecting intellectual-property rights. If you are providing services and an agreement contains a work-for-hire section, it can mean the work you create is made for the other party and they will own the IP rights. If you are hiring someone to create something, such as a logo, this section matters too because you may want to own what you are paying for.

5. Mutual agreement of the parties

You should be able to approve changes. Any language about changing terms, editing language, or drafting future amendments should be followed by language stating that changes can only happen after both parties agree.

Contracts are more intricate and powerful than many business owners realize. It is always recommended to seek the help of an attorney when you have questions about an agreement.

This post is intended for general informational purposes and is not intended to be, and shall not be relied upon, as legal advice.