Commercial Law
Commercial Contracts: The Clauses That Decide Disputes
Termination, penalty and dispute-resolution clauses carry more weight in litigation than the commercial terms most negotiations focus on.
· 5 min read
Negotiation attention tends to concentrate on price, volume and term. Disputes, however, are usually resolved by the clauses that receive the least attention during drafting.
Termination mechanics
A termination right that does not specify notice form, cure period and consequences invites argument. Precision here converts a contested termination into an administrative step.
Penalty and liability structure
Penalty provisions must be proportionate and clearly linked to a defined breach to survive judicial review. Liability caps should account for the counterparty's actual exposure profile.
Forum design
The choice between courts and arbitration should follow the expected dispute type, enforcement geography and confidentiality needs — not habit.
