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Commercial Agreements 101

Essential Terms of Commercial Agreements.

Fraction Law general counsel are your perfect solution for drafting, reviewing, and negotiating your commercial agreements. Generally speaking, most day-to-day commercial agreements aren't legal rocket science. However, before signing you need to ensure you have all the key terms to protect your interests.

Here are several important terms of any commercial agreement:

Fraction Law is your go-to resource for affordable contract review, drafting, and negotiation.

Limitation of Liability

Perhaps the most important clause in a contract, a limitation of liability clause allows parties to limit their overall exposure to liability under a contract. The limitation clause could set an absolute or other cap on the amount of damages a party can claim in the event of a breach. Exclusions on the type of damages that can be claimed - for example, consequential or expectation damages, may also be included. Keep in mind - liability limitations are only useful if they are enforceable - this depends on principles of contract law, including interpretation, unconscionability, public policy.


Termination clauses outline the circumstances under which a contract terminates and relieves the parties from performance or liability. Termination can be: a) for cause, when another party breaches the contract; b) for convenience, at the discretion of a party to the contract; or c) automatic, upon an event occurring, such as completion of work, a specific date, or another event agreed to by the parties.


An indemnity is a contractual agreement where one party agrees to compensate for damage and loss incurred by the other party. In commercial agreements, indemnity clauses are typically worded to provide indemnification against claims made by third-parties. Indemnities can be confusing, even for lawyers, so it's important that you have a well crafted indemnity clause in your contracts that protects you without exposing you to excessive risk or liability. In most circumstances, it's beneficial to ensure that your indemnity is not unlimited. Also, be aware that limitation of liability clauses may not apply to indemnities unless care is taken when drafting.


A confidentiality clause protects your confidential, non-public or proprietary information, including trade secrets, that you disclose during the course of a contractual relationship. Make sure it is worded correctly - broad enough to capture the nature of your information, adequate to restrict the use of your confidential information, and enforceable.

Intellectual Property

Intellectual property clauses describe each parties rights to intellectual property under the contract. This may include the rights of a party to use pre-existing intellectual property, as well as the rights of each party to any new intellectual property created during the term of the contract. There are default legal rules as to who owns newly created intellectual property, so make sure you retain Fraction Law to include a well drafted IP clause in your contracts.

Governing Law and Jurisdiction

This clause sets out which jurisdiction's body of laws will govern the contract, as well as which jurisdiction will be the venue of dispute resolution and legal proceedings. Pick a jurisdiction that works for you - or alternatively - one that is neutral to both parties.

Force Majeure

A force majeure clause is a provision that allows a party to delay or cancel the performance of their contractual obligations when certain circumstances beyond their control arise which prevent them from performance. Typical events that trigger a force majeure clause include war, natural disasters, epidemics, and failure of public infrastructure. Force majeure does not have a standard legal definition, so you must draft a force majeure clause with care.

Entire Agreement

This clause is important because it states that the contract you signed is the entire agreement on the subject matter, and that no other agreements, understandings or terms shall apply to the contract. This excludes all prior discussions and agreements between the parties, including verbal assurances and promises in emails.

Fraction Law Knows Contracts

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