Three clauses that prevent most commercial disputes

Contracts are read when things go wrong

A contract is negotiated in optimism and read in conflict. The clauses that seem procedural at signature are usually the ones that determine what happens when the relationship deteriorates.

Payment terms

State the amount, the currency, the due date and what triggers it. "Payment within 30 days" is ambiguous: thirty days from invoice date, delivery, or acceptance? Specify whether interest accrues on late payment, and whether the supplier may suspend performance while sums remain unpaid. Where payment is by instalment, say what happens if one is missed.

Termination

Distinguish between termination for convenience and termination for breach. If either party may terminate on notice, state the notice period and the consequences: what is payable for work already done, what happens to materials or deliverables, and which obligations survive.

Dispute resolution

Identify the governing law and the forum. A clause that says only "disputes shall be resolved amicably" gives no route forward when amicable resolution fails. Where the parties are in different jurisdictions, this clause deserves more attention than any other.

A note on language

In a bilingual contract, state which version governs. Where this is left open, a translation difference can become the dispute itself.

The practical test

Read the draft and ask a simple question at each clause: if the other party stopped performing tomorrow, would this paragraph tell me what to do? If not, it needs work.