By: Andrew O. Clarke, Esquire

In my experience, when drafting contracts, you have to practice risk management.  Human relationships are often unpredictable.  Contracts are an attempt to manage the expectations of those relationships.  Different industries tend to have customs that change more often than others.  Stay on top of those trends by having an attorney review your contracts annually. Here are 5 issues to consider on your contract:

  1. The Domino Effect in Contracts: The Importance of a Severability Clause

One unenforceable sentence of your contract could effect the entire document.  To protect against this, add a “severability clause”.  An example of one would be the following:

“If one clause in this agreement is deemed by a court of competent jurisdiction to be unenforceable, that clause alone shall be stricken from this agreement.”

  1. I’m Not Liable for My Own Negligence: Misconceptions of Waivers of Liability

Ever been to an amusement park or take an adventure with a physical risk?  If so, you’d likely received a contract titled “waiver of liability”.  It is true that can assume the ordinary risks of engaging in an activity.  You cannot however, waive negligence.  Make sure your contract is not asking your patrons to waive negligence.  Exceptions apply so contact an attorney in your jurisdiction to review your contract.

  1. This Contract is Unassignable: The Constitution and the Right to Contract

The Fourteenth Amendment of the United States Constitution gives us all the right to Contract. Contracts that restrict assignment may be unenforceable. Contact an attorney in your jurisdiction to find out if your contract violates the United States Constitution.

  1. The Payday Lender Backlash: The Illegality of the Usury Contract

When lending money, keep in mind that contracts charging high interest rates cannot be enforced.  Each state has its own usury laws, so contact an attorney in your jurisdiction.

  1. That Was Not What We Agreed To: Preserving the Parole Evidence Rule

In breach of contract cases, you generally cannot introduce evidence of agreements made prior to the signing of a contract.  This is known as the “Parole Evidence Rule”. This is not automatic.  To avoid this, use this clause in your contract:

“This agreement constitutes the sole, complete, and binding agreement between the Contractor and Contractee. No prior oral agreements shall be binding and any subsequent agreements shall be in writing and signed by all parties.”

This is in no way an exhaustive list of issues to look for in your contracts or legal advice on the same.  If you have any questions, or need a professional review of your contract, contact an attorney in your jurisdiction.

Andrew O. Clarke, Esq., is an attorney licensed to practice in the District of Columbia and the Commonwealth of Virginia.  For more information on Andrew O. Clarke, Esq., visit his website at www.aclarkelaw.com.

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