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Avoiding unenforceable contract provisions - Part II

In a recent post we began a discussion about unenforceable contract provisions. We observed that business owners and individuals interested in forming their own businesses must frequently deal with contracts. Contracts tend to govern the ownership or rent of a business’s place of operations, a business’s dealings with vendors and suppliers, a business’s relationships with its employees and a host of other vital business functions.

It is therefore important to ensure, to the best of one’s ability, that the contracts affecting one’s business are both fair and enforceable. Generally, experienced attorneys can help businesses achieve this goal. Failure to be cautious and considerate when either drafting or agreeing to an existing contract’s terms can lead to costly consequences.

In our previous post, we discussed the fact that non-disparagement clauses are generally unenforceable in most jurisdictions. Similarly, many non-compete clauses are unenforceable. Certain jurisdictions have strict rules against the vast majority of these kinds of employment-related clauses. However, there are scenarios in which this kind of clause may be legally valid. For example, if the clause is reasonable, realistic, contains proper legal consideration and is drafted for the purpose of protecting trade secrets or other vital business interests, a non-compete clause may be valid. Questions about this specific kind of clause may be directed to an attorney.

Additionally, certain liability waivers are unenforceable. Many, many contracts contain liability waivers in order to help individuals and businesses escape legal disputes when possible. However, there are only so many scenarios that the law will permit individuals and businesses to escape liability for. Working with your attorney to understand when such clauses are legally enforceable can be helpful.

Source: Findlaw Free Enterprise, “5 Unenforceable Contract Provisions,” Christopher Coble, May 21, 2015

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