Contract terms and clauses with special meanings

Contract Terms and Clauses with Special Meanings

Best EffortsExuding effects beyond that of a normal person. Doing everything in your power and perhaps employing super human powers in completing a task.

A Promise to personally perform under the contract. A Personal guaranty may require you to use your own money to satisfy debts of the corporation or to complete tasks after the company is dissolved.

Personal Guaranty

Evergreen Clause

A contract clause that allows the contract to go on for infinity. A contract with no termination or expiration date.

Third Party Beneficiary

A third party beneficiary is someone that does not sign the contract, but is meant to benefit from the contract. The third party beneficiary can enforce the contract. And, if something goes wrong the third party beneficiary can even sue under the contract.

Limitation of Liability

Limits your ability to get compensated for the other person’s wrong doing. This means you may only be able to recover a set nominal amount of money, if the other person does something wrong.

Indemnification A promise to pay someone else’s legal fees and any other monies that may be owed if something is done improperly.

Waiver of Liability

A promise not to sue, demand money, or other damages if the other person did something wrong.

Cross DefaultThe right to terminate all agreements, if a person fails to perform or breaks a promise.

Force MajeureThe right to terminate a contract because of an act of God (such as a tornado or flood) and possibly any other act that is beyond the control of the people making the contract.

Business Judgment

A presumption that any decision is right, so long as it was made in good faith and all the information was reviewed and considered.

A decision made with business interests and ambitions in mind. There is considerable latitude here. Do not assume that business interests and ambitions are yours in particular.

Commercially Reasonable

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