To some, a contract may seem like one of the most complicated – and boring – legal documents around. All that legalese, all those provisions can really confuse most of us. But contracts may spell the difference between success and failure on a project. Contracts are written or spoken agreements intended to be enforced by law. Even if we find them difficult to understand, we’re going to look a little closer at the following four common contract provisions.
Choice of Law
This provision allows the parties to the contract to agree beforehand which state’s laws should be used to interpret the contract.
One example would be a Virginia business named Contracts, Inc. that is doing business with a corporation in Utah. They draft a contract, but each party wants to use the laws of their home state. At some point, they name the state of Delaware in their choice of law statement. There. The laws of Delaware will control.
Sometimes it’s not that easy. Courts may look for a link between the parties and the state they’ve chosen. Ask an attorney if choosing the laws of an unrelated state is worth the potential legal problems.
Choice of Venue
Also called a forum selection clause, parties use this contract provision to state where litigation will be filed if a major dispute erupts. This could prove helpful if a party to a contract chooses to file a lawsuit in a state that’s inconvenient for another party. It can also provide “home court advantage” to one of the parties.
The parties to a contract may want to protect someone against legal responsibility for things they’ve done. In some transactions, indemnification includes compensation or exemption from liability.
One example of indemnification involves insurance contracts. The insurer agrees to compensate the insured for losses. In return, the insured pays premiums to the insurer. If the insured has an accident or loss of some king, the insurance company pays.
This one seems pretty obvious – someone’s attorney fees are paid if a dispute arises. But which party’s fees are paid? Are the fees limited?
Typically, the party that loses a lawsuit pays the attorney’s fees for the winning party. Courts will decide the reasonableness of the fees, after considering bills and sometimes expert testimony.
If the contract does not contain any language about attorney’s fees, each party will probably bear their own costs.
Have Your Contracts Reviewed by an Attorney.
Some contract provisions appear innocent but have a long-lasting effect. Have an experienced lawyer review your contracts before you sign.
Let the attorneys at the Dillon Law Group, PLC, help you. Call us at 757-962-4796 to schedule an appointment or use our Contact Form. We assist clients in Virginia Beach, Newport News, and surrounding areas.