The contract clauses that matter, explained clause by clause
For each clause: what it does, standard language, fallback positions, where it breaks by jurisdiction, and what to catch on review.
Risk allocation & liability
- Compliance with LawsHow a compliance with laws clause works, the all-laws versus material-laws scope fight, named regimes like anti-corruption and sanctions, and what to catch on review.
- Force MajeureHow a force majeure clause works, what events count after recent disruptions, notice and mitigation duties, fallbacks, and what in-house counsel should catch on review.
- IndemnificationHow an indemnification clause works, the duty to defend, caps and carve-outs, the fallback positions both sides accept, and the red flags in-house counsel should catch on review.
- InsuranceHow an insurance clause works, the coverage types and limits to require, additional insured and waiver of subrogation, fallbacks, and what in-house counsel should catch on review.
- Limitation of LiabilityHow a limitation of liability clause works, common caps and carve-outs, usual fallback positions, where caps can fail to hold up in court, and what to catch on review.
- Liquidated DamagesHow a liquidated damages clause works, the test that separates an enforceable estimate from an unenforceable penalty, market-standard rates, fallbacks, and what to catch on review.
- Representations and WarrantiesHow representations and warranties work, knowledge and materiality qualifiers, the bring-down, the remedies for a breach, and what in-house counsel should catch on review.
- WarrantyHow a warranty clause works: express vs implied warranties, disclaimers under the UCC, the remedies it triggers, and the red flags to catch on review.
- Warranty DisclaimerHow a warranty disclaimer works, which implied warranties you can and cannot disclaim, the conspicuousness rule, as-is sales, fallbacks, and what to catch on review.
Term, termination & survival
- SurvivalHow a survival clause works, which obligations should survive termination, how long they last, the market-standard list, and what in-house counsel should catch on review.
- Term and RenewalHow a term and renewal clause works, auto-renewal traps, the notice window to cancel, state auto-renewal laws, and what in-house counsel should catch on review.
- TerminationHow a termination clause works, the difference between for-cause and for-convenience exits, cure periods, the effects of termination, and what in-house counsel should catch on review.
- Termination for ConvenienceHow a termination for convenience clause lets a party exit without cause on notice, what wind-down and termination costs are owed, the one-sided risk, and what to catch on review.
Confidentiality, data & IP
- ConfidentialityHow a confidentiality clause defines protected information, the standard exclusions, how long the duty lasts, and the residuals trap that quietly guts your protection.
- Data ProtectionHow a data protection clause and DPA allocate controller and processor roles, govern subprocessors and transfers, and set breach notice timelines, plus what to catch on review.
- Intellectual PropertyHow an IP clause splits background and foreground IP, when to take ownership versus a license, the feedback trap, and what in-house counsel should catch on review.
- License GrantHow a license grant clause works, the scope dials that set its value (exclusivity, territory, field, term, sublicense, transferability), and what to catch on review.
- Source Code EscrowHow a source code escrow clause works, the release conditions that actually trigger, why verification matters, and whether escrow is worth the cost for in-house counsel.
- Work Made for HireWhen work made for hire actually applies under US copyright law, why it often fails for contractors, and why every WMFH clause needs a present-assignment backstop.
Restrictive covenants
- ExclusivityHow an exclusivity clause works, where to draw the scope, the minimum-commitment trade, the antitrust edges to watch, and the red flags to catch on review.
- Non-CompeteHow a non-compete works, what makes it enforceable, the state-by-state reality, the FTC rule that was struck down and removed from the CFR, and the red flags to catch on review.
- Non-SolicitationHow a non-solicitation clause works, the difference between employee and customer non-solicits, what survives in court, and the red flags to catch on review.
Commercial & deal terms
- AccelerationHow an acceleration clause works, automatic versus optional acceleration, notice and cure requirements, deceleration, and what to catch on review.
- AssignmentHow an assignment clause works, the consent standards, the change of control exception, the successors-and-assigns mechanics, and the red flags to catch.
- Change of ControlHow a change of control clause works, the deemed-assignment trigger, the termination right, the deemed-assignment fights, and the red flags to catch on review.
- Conditions PrecedentHow conditions precedent work: CPs to closing, conditions to each party's obligations, satisfaction vs waiver, what happens when a CP fails, long-stop dates, and review red flags.
- Costs and ExpensesHow a costs and expenses clause works: each-party-bears-own as the default, prevailing-party fee-shifting, the American Rule, and the language to catch on review.
- Material Adverse ChangeHow a MAC/MAE clause works, what actually qualifies as a material adverse change, the carve-outs that decide deal certainty, and what to catch on review.
- Most Favored NationHow an MFN clause works, the pricing-parity mechanics, the audit rights that enforce it, the carve-outs that make it livable, and the red flags to catch.
- Payment TermsHow a payment terms clause sets invoicing and net days, handles disputed amounts, charges late interest, and earns the right to suspend, plus what to catch on review.
- Right of First RefusalHow a right of first refusal works, how it differs from a right of first offer, the matching and timing windows that decide its value, and what to catch on review.
- Service Level AgreementHow an SLA clause sets uptime, the exclusions that shrink it, how service credits are calculated, and why 'credits as sole remedy' is the line in-house counsel must catch.
- Set-OffHow a set-off clause lets a party net amounts owed against amounts due, the difference from withholding, the limits and bankruptcy rules, and what to catch on review.
- SubordinationHow a subordination clause ranks claims senior vs junior, where it shows up in lending, SNDAs, and intercreditor deals, how standstills work, and what to catch on review.
Dispute resolution
- ArbitrationHow an arbitration clause works, the FAA, choosing the seat and rules, what to carve out, costs and confidentiality, when courts step in, and what to catch on review.
- Class Action WaiverHow a class action waiver works, why it is paired with arbitration, where it holds and where it fails, severability and the blow-up clause, and what to catch on review.
- Dispute ResolutionHow a dispute resolution clause works: arbitration versus litigation, forum and governing law, tiered escalation, class and jury waivers, and what to catch on review.
- EscalationHow an escalation clause works, the negotiate-then-mediate-then-litigate ladder, its enforceability as a condition precedent to suit, and the drafting traps to catch.
- Forum SelectionHow a forum selection clause works, exclusive versus permissive venue, why it is not the same as governing law, when courts enforce it, and what in-house counsel should catch.
- Governing LawHow a governing law clause works, why it is not the same as forum or venue, the market-standard choices, when a court ignores your pick, and what to catch on review.
- Waiver of Jury TrialHow a jury trial waiver works, why enforceability varies by state, the conspicuousness rule, mutual versus one-sided drafting, and what in-house counsel should catch.
Boilerplate
- AmendmentHow a no-oral-modification amendment clause works, the written-only standard, when courts enforce it and when they look past it, and what to catch on review.
- CounterpartsHow a counterparts clause works, signing in separate copies, e-signature validity under E-SIGN and UETA, the documents the statutes exclude, and what to catch.
- DefinitionsHow a definitions clause works, how defined terms and interpretation rules control scope and money, and the review traps to catch before a term quietly rewrites the deal.
- Entire AgreementHow an entire agreement clause works, what it excludes, its link to the parol evidence rule, the market-standard language, and what in-house counsel should catch on review.
- Further AssurancesWhat a further assurances clause does, how the reasonableness and expense qualifiers limit it, where it matters most (IP, M&A, finance), and what to catch on review.
- Independent ContractorHow an independent contractor clause disclaims employment and agency, allocates tax and benefits, addresses control, the misclassification risk, and what to catch on review.
- NoticesHow a notices clause works, accepted delivery methods, when notice is deemed received, why email-notice disputes happen, and what in-house counsel should catch on review.
- RecitalsWhat recitals (the WHEREAS clauses) do, whether they are binding, how they aid interpretation, and the drafting traps: substantive obligations, wrong facts, and estoppel.
- SeverabilityHow a severability clause works, how it keeps a contract alive when one term is struck, blue-pencil reform, the market-standard language, and what to catch on review.
- Successors and AssignsHow a successors and assigns clause works, why it does not permit assignment on its own, its link to change of control, and what to catch on review.
- WaiverHow a no-waiver clause works, why skipping enforcement once does not surrender the right, the course-of-dealing risk it controls, and what to catch on review.