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What are some problematic contract clauses?

On Behalf of | Oct 3, 2021 | Contracts

Contracts can do a lot of good for your business. They offer great protection and security when entering into deals. The issue is when creating a contract, you may add in certain clauses that could spell trouble in the future.

According to Business News Daily, contract clauses can become problematic when they step outside the law or create an unfair situation. You must be careful to avoid the common problematic clauses.

Automatic renewal

Contracts with automatic renewal clauses can be an issue because they may confuse the other party. It can also create trouble for you if you sign a contract with such a clause. Automatic renewals require advanced notice to end the contract and could get you stuck in an agreement that is no longer beneficial.

Financial

Some contracts will include a clause that you must pay for legal fees or meet other financial obligations for the other party if you have disagreements over the contract. This could lead to a huge bill if there is an issue. It is best to avoid such clauses.

Ownership

If you are working on a creative project, you should make sure to include in your contract who retains the intellectual property rights. If you fail to do this, the other party could sell or use the property outside of your agreement. Always lock down IP rights.

It is essential to ensure you do not create any loopholes in your contract that would allow the other party to break the agreement. You should make sure you remove any problematic clauses that could open the door to enforcement issues.

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