Commercial contracts form the backbone of many commercial transactions from vendor agreements to client engagement agreements.  While no two businesses or industries are the same, all commercial contracts share certain fundamental structures and clauses that have become part of the body of “best practices”.  There is both an art and science to drafting them and the following provisions are some of the most critical in forming a complete commercial contract.

• Parties Block
• Recitals
• Consideration
• Definitions
• Services
• Payment
• Term &Termination
• Ownership & Rights
• Account Information and Data
• Representation & Warranties
• Disclaimer of Warranties
• Confidentiality
• Forum Selection and Choice of Law
• Force Majeure
• Liquidated Damages
• Integration

Parties Block. The first paragraph lists who the parties are, where they are located or incorporated, and the date the contract will commence. Hereinafter clauses for party names are introduced here, which are just short-forms, since repetition of a party name may unnecessarily lengthen the contract. (e.g., Gotham Industries may be shortened to “Gotham”)

Recitals.  This section often sets out a few plain English clauses that describe the background of the transaction.  In other words, this section provides the context for the agreement.  Often such clause will begin with “Whereas” and then continue with a basic statement such as “Client wishes to engage Contractor and Contractor wishes to be engaged on the terms herein.”

Consideration. Consideration is a concept used to distinguish promises that don’t give rise to legal obligations from ones that do. If an agreement lacks consideration, no legal remedy will be provided. Thus, it makes good sense to have a provision stating what is the consideration, e.g., mutual promises. Both parties must agree to do something in exchange; one party’s promise to give away a product without some exchange is generally unenforceable.

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