4 Things to Look for in Your Business Contract to Ensure You're Covered

It is a common thing to find experienced business people with enough legal knowledge so that they could probably pass selected sections of the bar exam in their state. Knowing what to look for in a contract is on of those legal topics that can either be learned in law school or in the school of hard knocks.

if you're in business and planning to enter into legal agreement with another business, a client or other party, here are some things to consider.

Severability Clause

It is possible, although increasingly unlikely, that if your contract does not include a clause that states any provision found unenforceable by a court can be severed while leaving the rest of the agreement intact, the entire contract can be thrown out in the event of a dispute. This is a relatively standard item, so it doesn't hurt to add it near the signature line.


Make certain your business attorney drafts a contract that states any dispute is under the exclusive jurisdiction of the courts in your state. if your counterparty agrees, you have overcome one of the major hurdles in diversity jurisdiction. If you fail to include this provisions, your out-of-state counterparty may escape legal process many of that the parties some from two or more different states on the grounds your court has no jurisdiction over them. In either event, litigation this issue only delays the proceedings and adds to your costs.

Personal Guarantee

Your attorney from Braverman Kaskey will tell you unless your conterparty's business entity is publicly traded, you'll want to make certain they sign in a personal capacity instead of just as an officer of their company. In addition to piercing the corporate veil, this will prevent your conterparty from turning out the lights and disappearing out the back door in the event of a dispute.


Since non-competition agreements are becoming harder and harder to inforce it's often a good idea to include a non-disclosure agreement even if you don't plan to share any valuable confidential information. This gives you ("NDA") enormous leverage in the event your counterparty is double-dealing or trying to team up with another interested party to eject you from the deal.

Make certain the NDA survives the contract, as you don't want a breach for free your counterparty to use your own agreement against you.

Business contracts can be a major hassle and major expense, but they are the only way to measuring unnecessary liability after the agreement ends even, As always, you should contact a qualified business lawyer at your earliest convenience before negotiations begin.