Blog Layout

Unique Contract Clauses that can Reduce the Likelihood of Litigation

One of the primary goals of every contract is to reduce the likelihood of litigation between the parties if a dispute should arise. An experienced business attorney can help you protect your best interests through careful and creative drafting. Below are a few examples of creative contract clauses that can not only improve your working relationship with the other party, but also reduce the chances of a lawsuit being filed when an issue arises under the agreement:

Status Reviews

Most disputes occur because there is a breakdown in the communication between the parties. If your contract requires the parties to have status-review conference calls periodically, it can help ensure that the parties talk through their issues before they snowball into major arguments. The parties are more likely to make the effort to hold status-review conferences if the contract requires it.

Notifications sent to Higher-Management

In certain types of contracts, it can be beneficial to include a clause that requires the parties to confer with higher-management when disputes arise. The inclusion of key personnel can allow the parties to act or react quicker and potentially settle the disagreement before the matter goes to litigation. Additionally, having higher-management involved in the discussions can assist with removing personal conflicts and/or hidden agendas of those that are closer to the dispute.

Evaluations

Depending on the type of contract, it may be helpful to require the parties to seek a non-binding evaluation of a neutral party regarding the opposing positions. The purpose of this preliminary evaluation is to give each party a “reality check” and encourage settlement of the disagreement before legal counsel must get involved.

Award of Attorney’s Fees

When a contract includes a provision that allows a party to recover attorney’s fees, it can be a strong motivator to avoid litigation. For example, if a party makes an offer to settle and it is rejected, the contract can award attorney’s fees to the party that made the settlement offer if the court award is not more than a certain percentage higher than the rejected offer.

If you are interested in learning more about drafting contracts that protect the best interests of your business, contact the legal team at The Swenson Law Firm to schedule an initial consultation.

Share by: