As New York business lawyers, almost everything we do involves business contracts (whether an oral agreement or in writing). To avoid any ambiguity, best practice is to have all agreements in writing. The devil is in the details when it comes to drafting and negotiating a solid New York business contract. Here is a short list of the top 10 provisions (among other provisions) a New York business lawyer should address in a New York business contract:

  1. Identification of the Parties. It is imperative the parties to the agreement should be clearly identified, using full legal names of individuals or companies, including contact information. A d/b/a is not a legal entity and should not be used.

  2. Material Terms and Duration. Well-drafted New York business contracts should clearly set forth the material terms such as price, scope of work or products being sold and have a limited duration (with perhaps extension periods). Other material terms might include service credits or refund policies, among others.

  3. Governing Law. The parties should choose which state’s law will govern the interpretation of the business contract, in the event a third-party or court has to resolve a contract dispute. Governing law is different from “venue” (or the geographical jurisdiction) of where the dispute must be heard. It is generally acceptable to have New York law govern an agreement regardless of which state court might resolve the dispute.

  4. Integration (“Merger”) Clause. If you have multiple agreements with the same counterparty, it is generally a best practice to consider an integration clause (or merger clause). Simply put, an integration clause in a contract either allows, denies, or allows in part certain prior agreements between the parties to be “merged” into the current contract. This is a short-cut to avoid renegotiating previously negotiated clauses.

  5. Confidentiality and Non-Solicitation. Generally businesses have proprietary information, know-how and human capital. These provisions define the confidentiality obligations of the parties to a New York business contract and set forth any restrictions on the parties regarding the poaching of employees, contacts and customers.

  6. Indemnification and Other Liability Provisions. These provisions in a New York business contract set for the limitations of liability of the parties, whether consequential damages are applicable in the event of a breach, and whether there are any instances where a party can be indemnified for certain damages upon demand without going to court.

  7. Termination Clause. As mentioned above, business contracts should be for a limited duration (with appropriate provisions to extend if so intended). But, there may be certain events that should permit one party to terminate the agreement (or even give rise to an automatic termination) for breach of obligations, bankruptcy, or other (non) performance metrics.

  8. Assignment. Under New York law, absent a provision to the contrary, most New York business contracts are freely assignable (except contracts for unique personal services and the like). An assignment clause fences in a party’s right to freely assign the contract. For instance, a party might want to prohibit the other party from assigning the contract to a competitor or a party with less creditworthiness.

  9. Warranty. Sometimes there an expectation of the party receiving the products or services under a New York business contract to a certain standard of quality. If so, the contract should state the warranty period, how warranty claims should be handled, and what if the services cannot be performed to the standards set forth in the contract. Or perhaps there is no warranty given, and the contract should be specific as to what rights and remedies are being waived.

  10. Dispute Resolution. Unfortunately, not all business relationships go smoothly, so there should be a mechanism of resolving disputes — perhaps setting forth escalation procedures, mediation, arbitration or a combination of resolution options. It is more efficient and cost-effective to set forth a process for resolving New York business contract disputes before they arise.

Before you “paper your handshake” and sign a New York business contract, you should contact a New York Business Lawyer.