How to draft a successful commercial contract
The key clauses no commercial contract should be without, and the common mistakes that later turn into disputes.
A commercial contract is the first reference in any disagreement between the parties, and every ambiguity in it can turn into a long and costly dispute. These are the main elements that make a contract clear and enforceable.
1. Parties and capacity: write the full name, address and commercial register or national ID number, and make sure the person signing is authorised to sign for the company (a legal representative or an agent with a valid power of attorney).
2. Subject matter: describe the goods or service precisely: quantity, specifications, quality, place and date of delivery. Long technical specifications go into an annex referred to in the contract and signed by both parties.
3. Price and payment: state the price, currency, payment dates and method, the consequences of delay, and who bears taxes and expenses.
4. Term, renewal and termination: when the contract starts and ends, whether it renews automatically, the grounds for termination and the notice period required.
5. Penalty clause: the parties may agree in advance on compensation for breach, bearing in mind that the judge may reduce it if it is shown to be grossly exaggerated or that the obligation was partly performed.
6. Force majeure and confidentiality: set out the effect of circumstances beyond the parties’ control on their obligations, and protect your business information with a clear confidentiality clause.
7. Dispute resolution and governing law: agree on the competent court or on arbitration, on the law governing the contract, and on which language prevails if versions differ.
Common mistakes: relying on ready-made templates that do not fit the deal, leaving verbal terms outside the contract, signing only the last page, and not keeping a signed original.
Having the contract legally reviewed before signing costs far less than handling a dispute afterwards.
