Devoted to purchasing, purchasing agents, and all things related

Contract Discussion Disclaimer:  I'm not a lawyer, nor do I play one on TV.  (Note to Court TV: I'd love to play a lawyer on TV, though, so please feel free to get in contact with me when casting your next judicial re-enactment show.)  In this post, I will share with you my personal experiences in drafting and negotiating contract language.

These next few sections of a contract sound like something out of a pre-nuptial agreement or maybe something you'd see on Divorce Court.  Conventional wisdom states that one thing clear upon entering an agreement should be how the parties will get out of the agreement when it is time to part ways.

Termination - Sounds like a terrible word doesn't it?  Sometimes you see "Expiration Date" in some places but "Termination" is more accurate because Buyer and vendor might part ways before the originally agreed upon expiration of the contract. 

Buyers often fight for (and vendors protest) a "termination for convenience" clause also knows as an "out clause."  There is is usually a 30, 60, or 90 day notice attached to this.  It simply means that the Buyer can exit the contract for any reason or no reason after giving the vendor proper notice.  In my personal experience, I have seen a lot of time spent on this in negotiations, but I have never seen this clause exercised by a Buyer in any situation.

Dispute Resolution - This is usually some "feel-good" language that states that both parties will try to resolve issues in good faith and may use binding arbitration if they can't agree.  Sounds nice, but I don't think any legal firms have gone out of business because this clause is inserted in contracts.

Acts of God (also known as Force Majeure) - This is the line that excuses failure to perform contractual duties for reasons including, but not limited to : strikes, government acts or orders, market restrictions, war, fire, flood, earthquakes, typhoons, blizzards or other natural disasters or Acts of God.  Look for some more comments on this topic in a future post. 

Coming up in Part 4 - Confidentiality, Orders, and Miscellaneous 

This series gives you some basic knowledge of contracts.  If you missed any of the other posts, here are the links:

Who Needs A Contract?   What is a Contract?   Anatomy of a Contract - Part 1   Anatomy of a Contract -  Part 2   Anatomy of a Contract  - Part 3   Anatomy of a Contract - Part 4