The drafting of commercial contracts is of vital importance in the business world, particularly in defining the contours of the commercial relationship. Whether you’re a sole trader or a company, sooner or later you’ll be faced with a commercial contract. It governs relations between the company and its partners, customers, suppliers or any other commercial player. More broadly, the commercial contract frames the relationship between buyer and seller.
The purpose of this article is to explain the essential clauses to be included in your commercial contracts, to avoid having a “standard” contract that is unsuited to your needs, and to protect you against the risks associated with contract performance.
First and foremost, it’s worth recalling the specifics of commercial contracts and those that are most common.
1) What is a commercial contract?
As a reminder, commercial contracts are legal acts whose object is commercial or which are performed by a merchant for the needs of his trade. As only one of the parties may be a trader, the contract becomes a mixed commercial contract.
The particularities of commercial contracts lie in :
- Purpose: commercial
- The parties: at least one of the parties to the contract must be a trader
- Breach of contract: notice period required
- Jurisdiction: that of the defendant, as a matter of principle
2) Different types of commercial contracts
There are several types of commercial contract in the business world, each corresponding to specific needs and situations.
- Sales contract: sets out the terms and conditions of the sale of goods between a seller and a buyer.
- Supply contract: sets out the conditions for the supply of goods or services between a supplier and a customer.
- Distribution contract: governs the conditions under which a distributor will distribute the products or services of a manufacturer or supplier.
- Commercial leases: govern the leasing of real estate for commercial purposes (mainly business premises).
- The partnership contract: sets out the terms of a collaboration between two parties within the framework of a joint venture.
- Contract for the provision of services: provides a framework for the provision of services by a service provider to a customer.
3) Essential clauses in commercial contracts
The commercial contract is standardized and must include various clauses. It is important to draft it as precisely as possible.
We offer you examples of essential clauses to include in the drafting of your commercial contracts in order to protect you against any resulting disputes:
- Clear identification of the parties to the contract: this makes it possible to be certain who is committing and who is not.
- Purpose of the contract: specifies what the contract covers
- Financial terms: this clause specifies the price, consideration, method of payment, any discounts or penalties for late payment.
- Contract duration: this determines whether the contract is for a fixed term (clearly defined period) or for an indefinite period (undefined period).
- Confidentiality: this is relevant if the information contained in the contract requires protection.
- Termination of the contract: indicates the conditions under which the contract may be terminated without recourse to a judge.
- The liability clause: it may be restrictive if it aims to reduce liability in the event of non-performance of the contract or a contractual obligation to compensation, or even exclusive if it aims to exclude all liability in the event of breach of contract.
- Penalty clause: provides for a financial penalty, generally a fixed sum of money, to be paid by one party in the event of a breach.
- Revision clause for unforeseen circumstances: this obliges the parties to renegotiate the contract if changes in circumstances have made its performance too onerous for one of the parties. They are particularly useful in times of economic crisis or pandemic.
- The force majeure clause: offers protection to the debtor if he is unable to perform his obligation due to an external, unforeseeable and insurmountable event.
- Disputes: sets out the procedures to be followed in the event of a dispute between the parties, such as mediation or arbitration.
- Attributive of jurisdiction: It indicates the jurisdiction that will govern the contract in the event of a dispute, and could therefore save you having to take proceedings in a distant court.
Because of their importance in framing the contractual relationship, these clauses must be drafted with great care. Thanks to contractual mechanisms, it is possible to avoid the impact of any disputes that may arise in the commercial relationship.
That’s why our firm can help you draw up your commercial contracts.
