Seven Contract Clauses That Cause Most Business Disputes

1. Scope of work and change orders

Most services disputes are scope disputes wearing a payment-dispute costume. A specific deliverables list, acceptance criteria, and a written change-order process convert an argument about expectations into an argument about a document — which is a far cheaper argument to have.

2. Payment terms and remedies for non-payment

Net terms alone are not a remedy. Interest on late amounts, the right to suspend work after notice and a cure period, and recovery of collection costs give a counterparty a reason to pay before the relationship deteriorates.

3. Limitation of liability

This clause usually sets the ceiling on the entire relationship. Watch the cap amount and how it is measured, whether consequential damages are excluded on both sides, and which obligations are carved out of the cap — indemnity, confidentiality breach, and IP infringement commonly are, which can swallow the limit entirely.

4. Indemnification

Indemnity determines who funds a third-party claim. The details that matter are the trigger, whether defense costs are covered as incurred, who controls the defense and settlement, and whether the obligation is mutual. A one-way indemnity with no cap is one of the largest risks a small company can sign.

5. Intellectual property ownership and licenses

Ambiguity here is expensive. Separate background IP from deliverables, state clearly whether the customer owns the work product or receives a license, and address residual rights and the vendor's ability to reuse general know-how. In development agreements, confirm that contractor-created IP is actually assigned in writing.

6. Term, termination, and what survives

Termination for convenience, notice periods, cure rights, and wind-down obligations decide how fast a bad relationship can end. The survival clause decides which promises outlive the contract — confidentiality, indemnity, and payment obligations should be on that list.

7. Dispute resolution, venue, and fees

Arbitration versus court, the seat and rules, whether class claims are waived, governing law, and a prevailing-party attorney's fees clause together determine the cost and location of any fight. A fee-shifting clause changes settlement dynamics more than most parties expect — in both directions.

Rainey Law P.C. drafts and negotiates commercial agreements and litigates them when they break. Getting these seven right at signature is materially cheaper than arguing about them later.